El Salvador Adopts Bitcoin As Legal Tender

El Salvador’s Nayib Bukele, Latin America’s youngest president who’s known to break from the norms, said he plans to send legislation that would make Bitcoin legal tender in the country. El Salvador Adopts Bitcoin As Legal Tender

“In the short term, this will generate jobs and help provide financial inclusion to thousands outside the formal economy,” Bukele said in a video broadcast at the Bitcoin 2021 conference in Miami.

Buying the dip 😉

150 new coins added.#BitcoinDay #BTC🇸🇻

— Nayib Bukele 🇸🇻 (@nayibbukele) September 7, 2021

He said he would submit the legislature a bill next week.

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“Financial inclusion is not only a moral imperative, but also a way to grow the country’s economy, providing access to credit, savings, investment and secure transactions,” he said. “We hope that this decision will be just the beginning in providing a space where some of the leading innovators can reimagine the future of finance.”

#Bitcoin has a market cap of $680 billion dollars.

If 1% of it is invested in El Salvador, that would increase our GDP by 25%.

On the other side, #Bitcoin will have 10 million potential new users and the fastest growing way to transfer 6 billion dollars a year in remittances.

— Nayib Bukele (@nayibbukele) June 6, 2021

El Salvador’s bonds tumbled last month after Bukele’s party used the supermajority it won in February congressional elections to fire five top judges and the attorney general, drawing condemnation for what critics saw as a blatant power grab. Wall Street reacted swiftly, with Oppenheimer & Co., Amherst Pierpont Securities and Allianz SE among half-a-dozen firms that sold the notes or told clients to pare their holdings.

The move also fueled concern that the U.S. will urge the International Monetary Fund to closely review a much-needed loan for El Salvador, potentially upending government finances.

Bukele is among the region’s most popular leaders, according to public-opinion polls that show him with an approval rating of more than 85%. He has a strong social media following and charted an unconventional route to politics, working at his father’s marketing agency before serving terms as mayor of San Salvador and a suburb.

He ran for president in 2018 pledging to curb corruption and rampant gang-fueled crime, and became the first president in almost 30 years to win without the support of one of the major parties.

Jack Mallers, founder and CEO of the payments platform Strike, presented Bukele’s video during the meeting Saturday. He said the El Salvadoran government asked him to help develop a plan for the use of Bitcoin, according to the Bitcoin 2021 conference’s Twitter account.

Bitcoin Users Will Get Help Relocating And Working In El Salvador: President

Nayib Bukele says he wants to help entrepreneurs embrace El Salvador as a base, with Bitcoin free from capital gains tax.

Bitcoin (BTC) hodlers who want to earn BTC tax-free will get help to stay in El Salvador, the country’s president has said.

In a tweet on Monday, President Nayib Bukele said that his government would “help” settle foreign workers.
El Salvador: “We’ll help with this”

The announcement is one of many that continue to come informally from Bukele, now famous for attempting to put El Salvador on a form of “Bitcoin standard.”

At last week’s Bitcoin 2021 conferwnce in Miami, he told the audience in a prerecorded video message that he would send a bill to lawmakers demanding that Bitcoin be made legal tender.

Welcome to the future #Bitcoin pic.twitter.com/j30vcZVXvJ

— Nayib Bukele (@nayibbukele) June 5, 2021

Now, as part of social media engagement with well-known cryptocurrency figures, Bukele suggested that those wishing to travel to work in El Salvador would get official support. Once made legal tender, Bitcoin income would not face capital gains tax.

“We’ll help with this,” he replied while debating the topic with podcast host Stephan Livera.

Tu tienes Bitcoin? tu tienes residencia en el Salvador yo en cualquier momento caigo … https://t.co/drpnIQ1lAj

— MARCIANOTECH (@MARCIANOPHONE) June 6, 2021

In a separate tweet came promises of “immediate permanent residence for crypto entrepreneurs,” a move that spurred interest from figures such as Tron CEO Justin Sun and Binance CEO Changpeng Zhao, among others.
Latin America embraces Bitcoin

As Cointelegraph reported, meanwhile, El Salvador’s plan has already seen Paraguay make a similar move.

Likewise using Twitter as a venue for publicizing still unofficial government plans, one congressperson hinted that a deal involving PayPal would shortly be announced by Asuncion.

This likewise received a warm reception.

“Now Paraguay? The sovereign level game theory starting to take shape just like many have been talking about for years,” podcast host Preston Pysh responded.

Criticism has nonetheless come mixed with concern for El Salvador. The political structure of the country has worried some, while others believe that there would be international backlash over a Bitcoin standard.

Bukele, however, has already pledged to rise above external pressure.

“Some powerful interests will try to make this historical #Bitcoin move fail,” he wrote.

“They know what it means if it succeeds. It will.”

Plan B Passport, a dedicated service helping Bitcoin owners move to more appealing jurisdictions such as Portugal, has yet to add El Salvador to its list of destinations.

Latin Lawmakers Don Lazer Eyes On Twitter In Support Of Bitcoin

An increasing number of Latin American lawmakers are donning Lazer eyes on their Twitter avatars to express their support for Bitcoin and digital assets.

Gabriel Silva, a Panamanian congressman, is moving to follow in El Salvador’s footsteps by proposing legislation to adopt Bitcoin and other cryptocurrencies on a national scale.

El Salvador’s president, Nayib Bukele announced during the Miami Bitcoin conference on June 6, that he will submit a bill to lawmakers demanding that Bitcoin be made legal tender.

In a June 8 tweet, Silva emphasized the significance of Panama not being left behind by Bukele’s progressive crypto plans, which also includes removing capital gains tax on Bitcoin in El Salvador. According to a rough translation, Silva asserted:

“This is important. And Panama cannot be left behind. If we want to be a true technology and entrepreneurship hub, we have to support cryptocurrencies.”

“We will be preparing a proposal to present at the Assembly. If you are interested in building it, you can contact me,” he added.

Bukele’s announcement has prompted similar moves from other politicians across Latin America, however, few concrete policy proposals have been announced.

On June 7, Paraguayan congressman, Carlitos Rejala, tweeted “El Salvador to the Moon” and uploaded a picture of himself with laser eyes — a popular crypto meme used to express Bitcoin maximalism on crypto Twitter.

Earlier today, the crypto community had turned their attention to Brazilian politician, Fábio Ostermann, who similarly posted a picture of himself with laser eyes accompanied by the hashtag “#lasereyestill100k.”

Despite positive sentiment on social media regarding the apparent bullishness of Latin American lawmakers, the price of Bitcoin has continued to decline.

The price of Bitcoin has slumped roughly 10% since Bukele’s June 6 announcement from $36,000 to roughly $32,500 at the time of writing.

El Salvador Commerce Secretary: Bitcoin Won’t Replace Dollar

Miguel Kattán, a member of President Nayib Bukele’s cabinet, sought to reassure Salvadorans fearful of a full pivot to a bitcoin standard.

El Salvador’s proposed embrace of bitcoin would not end dollarization in the Central American economy, top government officials said, addressing concerns raised by citizens confused about the plan.

“The dollar will continue to be the legal tender in El Salvador. Operations can be done with bitcoin – obviously related to its value in dollars.” Miguel Kattán, El Salvador’s secretary of Commerce and Investment, said in remarks covered by local newspaper El Mundo on Monday.

Providing the most in-depth look yet at President Nayib Bukele’s plan to grant bitcoin legal tender status, Kattan said the still-under-wraps bill would create an opt-in bitcoin economy where the dollar, El Salvador’s official fiat since 2001, remains supreme.

Kattán explained during a Central Bank press conference, the first to address Bukele’s surprise Saturday announcement televised at the Bitcoin 2021 conference in Miami, that goods will remain dollar-denominated in El Salvador. A tomato that costs 20 cents, for example, will still cost 20 cents, even among sellers that accept bitcoin.

He sought to reassure Salvadorans fearful of a full pivot to a bitcoin standard. Radical social media prognostications of an economy where goods are priced in satoshis will never come to pass, he said.

The possibility of such a future had sparked pockets of confusion on social media, according to local journalist José A. Barrera.

“Until Saturday very few people knew about cryptocurrencies” in El Salvador, he said in Spanish over a series of Twitter direct messages with CoinDesk. “Let’s say it is not a popular topic.” But it began consuming Salvadorans’ online discourse almost at once.

“In social networks and discussions, people associate or think that they [would] have to have bitcoins” once the bill becomes the law.

The discrepancy between the bitcoin price (over $30,000) and their country’s sub-$300 a month minimum wage has only deepened the confusion, he said. (Bitcoin is divisible to the eighth decimal, making it possible to buy a fraction of a coin, but this is not always obvious to people unfamiliar with the cryptocurrency.)

For this reason, Barrera said, “it’s no coincidence” the government’s first official word on Bukele’s surprise announcement includes a promise “that bitcoin will not replace the dollar.”

“What the Law will say, at the end of the day, is that you can pay – if the person charging accepts Bitcoin and if the person paying wants to pay – using Bitcoin,” Kattán said during the press conference.

Even so, Kattán said the bill would recognize bitcoin as legal tender in El Salvador. The bill would also come with protections against money laundering, he said.

Kattán said bitcoin presents El Salvador with a growth opportunity. He pointed to the success of a community known as “Bitcoin Beach” where hotels, shops, restaurants and even the water utility accept bitcoin over the low-cost Lightning network.

“There is no difference from what we have today,” Kattan said. For consumers and merchants, “their relationship will always be with the dollar.”

Barrera said bitcoin is “probably” viable in El Salvador as many residents are already plugged into the digital economy.

“But we will have to wait to know what conditions the bill will have, which will surely pass as proposed by Nayib Bukele,” he said.

El Salvador, Paraguay Fail To Flip Bitcoin Bullis

Within Bitcoin, the word on everyone’s lips is “El Salvador.”

After payments gateway Strike began making serious inroads in the country, President Nayib Bukele formally announced that he would send a bill to parliament to make Bitcoin legal tender.

Should it succeed, El Salvador would be the first nation on Earth to do so, effectively adopting something akin to a “Bitcoin standard.”

Bukele confirmed his plans during a video address at last week’s Bitcoin Conference 2021 event in Miami, at which Strike CEO Jack Mallers outlined the plans.

Markets, however, were practically unmoved by the revelation — something that continued as a congress member from Paraguay took to social media to hint at plans for Bitcoin integration in a second world economy.

“As I was saying a long time ago, our country needs to advance hand in hand with the new generation. The moment has come — our moment,” Carlitos Rejala tweeted on Monday.

“This week we start with an important project to innovate Paraguay in front of the world! The real one to the moon.”

Rejala additionally thanked Bukele for his “example.”

As Cointelegraph reported, however, El Salvador’s embrace of Bitcoin may come at a price. Reacting, commentators touched on Bukele’s authoritarian leadership, along with potential teething troubles resulting from an economy that uses the U.S. dollar doing so.

For Caitlin Long, founder and CEO of Avanti Bank, there may be bigger forces at play.

“Bitcoin is hacking dictatorships, just like it’s hacking big tech,” she wrote in one of many tweets about the move.

“Bitcoin doesn’t care WHY El Salvador’s president wants to make BTC legal tender—it doesn’t matter.”

Bitcoin’s ‘Authoritarian Hipster’

El Salvador’s Nayib Bukele has built a career by courting the vulnerable while attacking the establishment. Now he wants Bitcoin as legal tender.

On Sunday, Salvadoran President Nayib Bukele tweeted out his new profile picture. It featured the popular, young upstart standing at a podium with a bitcoiner’s blood red laser eyes (instead of the usual statesman’s stare). In the background stand a few national guardsmen.

The day before, in a pre-recorded video screened to the 12,000 attendees of Bitcoin Miami, the 39-year-old president announced he had drafted a bill to present to the nation’s legislature to make bitcoin an official currency in El Salvador. It would be a monumental step for the nation, known less for its technological prowess than its significant underbanked population.

Details during the announcement were scant – a version of the bill wasn’t immediately made available – though Bukele sold this move as a way to “provide financial inclusion” for his citizens and “push humanity at least a tiny bit into the right direction.”

Changing his Twitter profile to reflect the hodler’s creed might be considered a formal statement on how serious Bukele is about making this happen.

“At this point I don’t think this is anything more than a symbolic gesture,” George Selgin, a Senior Fellow and Director of the Cato Institute’s Center for Monetary and Financial Alternatives, said about the plans in a phone interview. “Obviously he’s a clever politician that knows how to play up to a younger constituency and build popularity.”

Bukele has been lauded as a populist reformer as well as branded an “authoritarian hipster.” He took the presidency in the nation’s most recent election with 53% of the vote, after less than a decade holding various mayorships, running on an anti-corruption platform as part of a newly founded third party, Nuevas Ideas (New Ideas).

He describes his politics as neither left nor right, but instead reflective of what everyday Salvadorians want. In most public appearances, Bukele, the son of a rich Palestinian merchant, is seen wearing a backwards hat, aviators and closely trimmed beard.

His preferred method of communication? Going direct through social media, where he counts millions of followers, often using a tone “more appropriate for tweets about bitcoin or sports,” the Washington Post noted.

More than a year after his inauguration, Bukele’s popularity ratings hover between 80%-90%. During the coronavirus crisis he provided food assistance and $300 direct cash payments, winning him the admiration of his constituents. He’s also made an effort to build community centers, expand internet access and put a dent in gang-related crime.

But his governing tactics have, indeed, bent authoritarian at times. In February 2020, he sent armed soldiers into the legislature to demand they approve a loan for security equipment. In April 2020, he released official photos of hundreds of alleged gang members stripped nearly nude crowded together on a prison floor.

On May 1, he led efforts for the legislature to remove five magistrates from the Supreme Court who had opposed his policies. The next day it removed the country’s attorney general.

He ignored Supreme Court rulings challenging his COVID-19 lockdowns and has allegedly harassed political opponents, shunned the media and has vilified human rights groups. The Catholic Church, among other leaders in the country, denounced his “persistent efforts…to erode our democratic order.”

The Washington Post called him a “millennial autocrat” and compared the outsider politician to “political bomb-throwers” like former Italian prime minister Silvio Berlusconi and “blustery despots” including the Philippines’ Rodrigo Duterte and Brazil’s Jair Bolsonaro.

His latest turn to bitcoin continues these two trends of courting the most vulnerable while attacking the establishment. In his recorded message, Bukele claimed more than 70% of El Salvador’s 6.5 million people were left out of the banking system. A further 2 million or so live in the U.S. where they send home $6 billion in remittances – which make up about 23% of the nation’s economy – often getting gouged by middlemen.

Further, in his announcement, Bukele took aim at central banks like the Federal Reserve that are “increasingly taking actions that may cause harm to the economic stability of El Salvador” by printing money to prop up their own economies. Over the COVID year, Salvadorian exports sank 17%, foreign direct investment dropped $500 million while the country’s debt rose, according to Francisco De Sole, a guest speaker at the Wilson Center.

Making bitcoin a legal tender, Bukele said, fixes this. Not only would it provide a means for people to access an alternative, low-cost financial system, it would also attract investments in the nation.

If just 1% of the total BTC supply moved to El Salvador that would grow the nation’s economic output by nearly 25%, Bukele said. To that end, Bukele is working to make the nation’s tax and regulatory frameworks favorable for crypto businesses, and provide “immediate permanent residence for crypto entrepreneurs.”

“We hope that this decision will be just the beginning in providing a space where some of the leading innovators can reimagine the future of finance, potentially helping billions around the world,” he said.

Cato’s Selgin thinks mostly this is political theater and that there wouldn’t be a functional change in how El Salvador operates.

“Usually the designation of a currency as legal tender doesn’t mean very much. People are already free to ask for bitcoin as payment, if they want.” He noted the Bitcoin Beach community, on the coast of El Salvador, has been piloting a circular Bitcoin economy since 2019.

Rohan Grey, one of the authors of the proposed U.S. STABLE Act and Assistant Professor at Willamette Law, agreed that the move would likely have little effect. Bitcoin is an inherently flawed currency, Grey said, because of its volatility and deflationary aspects – few would choose it as their primary method of payment.

“Bitcoin as a private currency creates far more problems than it solves by trying to bring it into the legal system,” Grey said. For one, in handing over monetary control to a decentralized network, the Salvadoran government would be giving up some of its ability to set policy. Then there’s the matter of finding a peg for foreign exchange.

“If El Salvador does and demands that its citizens have the right to make those kinds of transactions, that’s going to run headlong into the domestic sovereignty of other countries’ legal tender laws,” he said.

Selgin and Grey argue El Salvador would have little meaningful impact for bitcoin itself, as has existed this far without the imprimatur of a government.

“Bitcoin is a phenomenon that has gotten this far on not being a government-based currency,” Selgin said. “It shouldn’t matter what Bukele says.”

Mexico Lawmakers Aim To Follow The Example Of Neighboring Countries With Proposed Bitcoin Legislation

“We are going to lead the shift to crypto and fintech in Mexico,” said one senator.

Eduardo Murat Hinojosa, a senator of the federal government of Mexico, has said he will be submitting a proposal to lawmakers seemingly aimed at crypto adoption in the country.

In a tweet today, Hinojosa changed his profile picture to feature the senator speaking into a microphone with the iconic “laser eyes,” indicating support for crypto. The lawmaker said he would be “promoting and proposing a legal framework for crypto coins in Mexico’s lower house,” specifically mentioning Bitcoin (BTC).

Voy a promover y proponer ante la Cámara de Diputados un marco legal para las criptomonedas en México #btc

I will be promoting and proposing a legal framework for crypto coins in Mexico’s lower house #btc pic.twitter.com/zwhYOZ7KAg

— Eduardo Murat Hinojosa (@eduardomurat) June 8, 2021

Hinojosa was not the only Mexico lawmaker indicating their support for crypto. Indira Kempis Martinez, a senator representing the state of Nuevo León, has also switched her profile to show laser eyes, with Hinojosa referring to her as a friend to the cause.

“We are going to lead the shift to crypto and fintech in Mexico,” said Hinojosa.

The social media activity comes as countries in Latin America have seemingly been taking steps towards greater adoption of crypto. In a video announcement to attendees of the Bitcoin 2021 conference last week, El Salvador President Nayib Bukele said he would send a bill to the country’s legislature demanding that Bitcoin be made legal tender.

On Sunday, Paraguayan congressperson Carlitos Rejala hinted that crypto would be connected to “an important project to innovate Paraguay in front of the world” starting this week. Yesterday he added that he was working with local crypto figures “in order for Paraguay to become a hub for the crypto investors of the world.”

A politician from Paraguay (@carlitosrejala) has posted a laser eyes photo and promised a bitcoin announcement this week.

Just as we saw MicroStrategy start the domino effect for public companies, El Salvador will likely be a catalyst for other countries.

(h/t @WClementeIII) https://t.co/V5bxdbeRWq

— Pomp (@APompliano) June 7, 2021

Though Mexico has many individual investors who back Bitcoin, authorities in the country reported last year that cartels had been increasing their use of crypto to launder funds. At the time, the head of the Mexican attorney general’s Cyber Investigations Unit said the country’s law enforcement lacked the resources needed to tackle money laundering when crypto was involved

Paraguay May Be Next To Court Crypto Businesses With July Bill

Paraguay Congressman Carlos Rejala hopes to draw crypto businesses to the South American nation with a new bill next month.

Next month, Paraguayan congressman Carlos Rejala plans to present a bill to attract international mining companies and other crypto businesses.

The project allows cryptocurrency companies — whether in mining or another segment, such as exchanges — to finance their Paraguayan operations with cryptocurrencies, remit dividends abroad and capitalize their cryptocurrency profits in local banks, Rejala told CoinDesk.

Rejala, a 36-year-old entrepreneur, discovered bitcoin (BTC, -2.36%) in 2017 and began trading in 2019, a year after taking a deputy seat for the independent Hagamos party, he said.

On Monday, following the announcement that El Salvador would introduce a bill to allow bitcoin to be treated as legal tender, Rejala tweeted a photo of himself with laser eyes and a sentence about the project.

“The announcement prompted me not to be afraid and to think that this can be real in my country,” he said.

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The project seeks to position Paraguay as the crypto hub for Latin America and a model for other countries in the region, he said, adding that if the bill is approved, he will seek to present a second one promoting the use of bitcoin as legal tender.

It’s been a longtime goal for local business leaders, who touted Paraguay’s cheap energy as far back as 2018.

“However, first we want to give Paraguay a blockchain-friendly status,” he said.

According to Rejala, one of the most attractive conditions for mining companies is the cost of electricity in Paraguay, which is around $0.05 per kilowatt-hour and is the lowest in the region. Almost 100% of production comes from hydroelectric sources.

“It is renewable energy, non-polluting, which is extremely important for the mining companies,” he said.

In a dialogue with First Mover on CoinDesk TV, Juanjo Benitez Rickmann, CEO of local mining company Bitcoin.com.py, said that mining in Paraguay only requires registration and payment of taxes, which he classified as lower than in the rest of the region. At present, the country has a system known as triple 10, which consists of 10% income tax, 10% VAT, and 10% personal income tax, Rejala added.

The country offers no restrictions on foreign capital flows and the payment of dividends abroad, Rejala added. “That also makes it an attractive country to crypto investors,” he said.

Paraguay does not use all the energy it produces, Rejala said. At the Itati hydroelectric plant, which Paraguay shares with Brazil, the country only takes 26% of the 6,067 megawatts it is entitled to monthly, submitting the rest to the neighboring country, he added.

“We have a lot of energy that we sell to Argentina and Brazil almost for free because we can only sell to our neighbors,” Benitez Rickmann said.

Next Steps

A draft bill, supported by different players in the crypto sector, was presented to several Paraguayan government offices, such as the anti-money laundering office, Benitez Rickmann said.

Rejala is currently seeking to attract support to achieve the required majority of 41 votes in the chamber of deputies and pass the bill to the Senate chamber, he said. If approved in both chambers, it will then have to be enacted by the country’s President, who has the power to issue a veto.

During the Bitcoin 2021 conference held in Miami, Benitez Rickmann said he spoke to a number of mining pool operators from China who asked for 100 megawatts of space.

“Maybe it is an opportunity for us to get involved with them and develop,” he said.

Updated: 6-9-2021

Bitcoin Miner Poolin Immortalizes El Salvador’s BTC Adoption On The Blockchain

El Salvador accepting Bitcoin as legal tender is now forever etched on the blockchain as mining pool Poolin adds a newspaper headline to block 686,938.

As is par for the course for Bitcoin (BTC), El Salvador becoming the first nation-state to adopt the cryptocurrency as legal tender is now immortalized on the blockchain.

Data from blockchain explorer service Blockchair shows block 686,938 bearing the message “asamblea aprueba la ley bitcoin” — meaning “assembly approves Bitcoin law” — which is the front-page headline carried by El Salvadoran daily Diario El Salvador on Wednesday.

Poolin, the third-largest Bitcoin mining pool by hash rate, was responsible for mining the transaction block that contained the message.

This El Salvador headline announcing #Bitcoin has become legal tender, was just embedded into the blockchain. It will now remain there for all of eternity. pic.twitter.com/DtHiFDB4XM

— Documenting Bitcoin (@DocumentingBTC) June 9, 2021

As previously reported by Cointelegraph, El Salvador’s legislature passed a bill to make Bitcoin legal tender in the country. Meanwhile, a wave of support for BTC among key government figures in Latin America continues to emerge to the excitement of several Bitcoin proponents.

Reacting to the growing trend, Chris Burniske, partner at blockchain-focused venture capital fund Placeholder VC, tweeted that move could be a means for Latin American nations to “strike back at dollars and debt.”

Earlier this week, former United States President Donald Trump doubled down on his Bitcoin stance, stating that BTC was competing with the U.S. dollar.

Poolin’s commemoration of El Salvador’s historic Bitcoin legalization move comes over a decade after BTC creator Satoshi Nakamoto etched The Times’ front-page headline from Jan. 3, 2009, on the blockchain’s genesis block:

“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

A few blocks in the Bitcoin blockchain also contain messages and other references meant to memorialize certain occasions.

When block height 666,666 came around back in January, the “winning miner” included a verse from the Bible: “Do not be overcome by evil, but overcome evil with good – Romans 12:21.”

In April, Coinbase had Bitcoin mining pool F2Pool embed a New York Times article in block 679,187.

El Salvador’s President Wants To Build Volcano-Powered Crypto Miners

Bitcoin is heating up — some may say erupting — as the Latin American country plans to tap energy from volcanoes for mining the cryptocurrency.

Nayib Bukele’s plans for crypto in El Salvador are still in motion, with the president now calling for a geothermal power company to make certain facilities available to Bitcoin miners.

In a Wednesday tweet from Bukele, the president said he would be instructing Mynor Gil, the president of the state-owned electrical company LaGeo, to facilitate Bitcoin (BTC) mining “with very cheap, 100% clean, 100% renewable, 0 emissions energy” from the country’s volcanoes. The firm operates the only two geothermal power plants in El Salvador based in the regions of Ahuachapán and Berlín, with announced plans to construct new facilities in San Vicente and Chinameca.

I’ve just instructed the president of @LaGeoSV (our state-owned geothermal electric company), to put up a plan to offer facilities for #Bitcoin mining with very cheap, 100% clean, 100% renewable, 0 emissions energy from our volcanos

This is going to evolve fast! pic.twitter.com/1316DV4YwT

— Nayib Bukele (@nayibbukele) June 9, 2021

More than half of the country’s energy comes from renewable energy, with a geothermal power installed capacity — El Salvador is home to 23 active volcanoes — of more than 200 Megawatts. However, reports suggest that El Salvador’s geothermal power potential is closer to 644 MW, meaning LaGeo is currently tapping roughly 31% of the power generation available. According to data from the Cambridge Bitcoin Electricity Consumption Index, Bitcoin uses more than 116.7 terawatt-hours of electricity per year.

The mining solution comes in the middle of a long list of pro-crypto actions Bukele has taken over the last several days. At the Bitcoin 2021 conference in Miami last weekend, the El Salvador president told attendees via recorded message that he would be introducing a bill to make Bitcoin legal tender in the country — a proposal that passed with a supermajority in the nation’s Legislative Assembly earlier today.

At the time of publication, the price of Bitcoin is $36,021, having risen more than 10% in the last 24 hours.

Small Countries Are Punching Above Their Weight In Terms Of Bitcoin Gains

Chainalysis tracked total U.S. dollar gains made by Bitcoin investors in 2020. The country comparison was drawn from an analysis of web traffic on various cryptocurrency exchanges.

Emerging markets appear to be punching above their weight when it comes to Bitcoin (BTC) investment, offering further evidence of growing worldwide adoption, according to a new report from cryptocurrency analytics firm Chainalysis.

A geographic analysis of realized Bitcoin gains revealed that investors in the United States generated $4.1 billion in returns last year, which is more than three times higher than second-ranked China, Chainalysis said.

Although economic stalwarts such as Japan, the United Kingdom and Germany were near the top of the list, several countries are investing a lot more in Bitcoin relative to traditional economic metrics like gross domestic product.

In other words, GDP doesn’t seem to be a strong indicator of who is generating higher return on investment in Bitcoin.

A standout case is Vietnam, a country that ranks 53rd in GDP but 13th when it comes to realized Bitcoin gains. The East Asian country’s sharp pivot from a centrally planned economy to one embracing market reforms has allowed it to slash its poverty rate from over 70% to below 6% since 2002, according to the World Bank.

Chainalysis also drew attention to the Czech Republic, Turkey and Spain, which rank 54th, 25th and 19th in GDP, respectively, but all fall within the top 20 in terms of realized Bitcoin gains.

The 2020–2021 Bitcoin bull market began in October of last year, as the price had increased from around $11,000 to over $29,000 by Dec. 31. Bitcoin’s price would eventually peak near $65,000 in April before undergoing a sharp correction.

Chainalysis was able to extrapolate country-specific data by analyzing location-based web traffic on various cryptocurrency exchanges. Cointelegraph asked the analytics firm how it was able to account for the potential presence of VPN usage by exchange users. While Chainalysis acknowledged the limitations, the company stood by its rigorous analysis of transaction data, stating:

“We acknowledge that there are clear limitations to using web traffic data, including the usage of VPNs and other products that can mask the geographic origin of web activity. However, the data that forms the trends we explore comprises millions of transactions, so this activity would need to be extremely widespread for it to meaningfully affect our data.”

The report echoes what many crypto enthusiasts have been saying all along — Bitcoin gives investors in emerging markets unfettered access to a high-performing asset. This is especially important in regions that are facing high inflation and stricter government controls over bank deposits and withdrawals.

Updated: 6-10-2021

IMF Plans To Meet With El Salvador’s President, Potentially Discussing Move To Adopt Bitcoin

The International Monetary Fund has previously spoken out against smaller nations like the Marshall Islands recognizing a digital currency as legal tender.

The International Monetary Fund has said El Salvador’s recent decision to make Bitcoin legal tender in the country may raise legal and financial concerns.

In a Thursday press briefing from the International Monetary Fund, or IMF, spokesperson Gerry Rice said the group was already in discussions with lawmakers in El Salvador over a loan to support the country’s economy, having approved emergency funds related to the pandemic last year. However, Rice said an IMF team would be meeting with President Nayib Bukele today and implied crypto would be a likely topic for discussion.

“Adoption of Bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis,” said Rice. “We are following developments closely, and we’ll continue our consultations with the authorities.”

Spokespeople for the IMF have often voiced concerns about countries adopting digital currency. In March, the group issued a similar warning against the Marshall Islands’ recognizing its digital sovereign currency, called SOV, as legal tender, as it may pose similar legal and financial risks. In that case, a spokesman said the islands’ local economy had been strained by the economic fallout of the pandemic and likely wouldn’t be corrected with the SOV.

In the case of El Salvador, the time between the introduction of ideas and action is seemingly short. President Bukele first announced he would propose a bill making Bitcoin (BTC) legal tender in El Salvador at a pre-recorded video message at the Bitcoin 2021 conference this weekend. The legislation passed with a supermajority in the nation’s Legislative Assembly yesterday.

Though the country is still seeking support from the IMF related to the pandemic this year, it has already begun to consider the energy needs of Bitcoin miners. Bukele said he would be instructing state-owned electrical company LaGeo, to make certain facilities available to miners to utilize geothermal power from the country’s volcanoes — El Salvador currently operates the two geothermal plants in Ahuachapán and Berlín.

“Crypto assets can pose significant risks,” said Rice. “Effective regulatory measures are very important when dealing with them.”

IMF Sees Risks After El Salvador Makes Bitcoin Legal Tender

El Salvador’s adoption of Bitcoin as legal tender may imply a series of risks and regulatory challenges, International Monetary Fund spokesman Gerry Rice said Thursday.

“Adoption of Bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis so we are following developments closely and will continue our consultation with authorities,” Rice said, speaking in Washington. “Crypto assets can pose significant risks and effective regulatory measures are very important when dealing with them.”

An IMF team is conducting virtual meetings with El Salvador on its Article IV review of the country and a potential credit program “including policies to strengthen economic governance” Rice said. The team will meet with Bukele Thursday.

El Salvador’s congress approved a law this week requiring businesses to accept Bitcoin in exchange for goods and services. President Nayib Bukele said the digital currency will help counter El Salvador’s low banking penetration and cut the cost of sending remittances.

The nation’s bonds dropped, sending the yield on its bonds coming due in 2025 up 71 basis points to 7.8% at 10:40 a.m. in New York. El Salvador’s bonds are the worst performers in emerging markets this week, according to a Bloomberg Barclays index.

“The plans for Bitcoin under an increasingly autocratic regime will likely only compound concerns about corruption, money laundering and the independence of regulatory agencies,” Siobhan Morden, head of Latin America Fixed Income Strategy at Amherst Pierpont, wrote in a note.

Updated: 6-11-2021

El Salvador’s Bitcoin Adoption An ‘Interesting Experiment,’ Says Bank of International Settlements Exec

El Salvador’s move to make Bitcoin legal tender in the country continues to elicit reactions from legacy finance gatekeepers — this time, from the Bank for International Settlements.

Benoît Cœuré, Bitcoin (BTC) critic and the head of the innovation hub at the Bank of International Settlements, called El Salvador’s historic move to make BTC legal tender in the country an “interesting experiment.”

According to Reuters, Cœuré made this assertion during the launch of the BIS’s fourth innovation hub in England on Friday, stating:

“We have been clear at the BIS that we don’t see bitcoin as having passed the test of being a means of payments. Bitcoin is a speculative asset and should be regulated at such.”

As previously reported by Cointelegraph, El Salvador’s parliament passed a bill to make Bitcoin legal tender in the country. The legislative vote on president Nayib Bukele’s “Bitcoin Law” passed by an overwhelming supermajority of 62 out of 84 votes.

Back in November 2018, Cœuré called Bitcoin the “evil spawn of the [2008] financial crisis.” Cœuré’s comments about the need for strict crypto regulations are a common theme within the BIS, with general manager Agustín Carstens also routinely calling for more stringent cryptocurrency laws.

Cœuré’s comments are coming on the heels of similarly stark warnings from the International Monetary Fund (IMF) in the wake of El Salvador’s decision. Reacting to the news, the IMF stated that the decision could pose significant legal and financial ramifications.

Indeed, reports indicate that Bitcoin could be a topic of discussion between the IMF and El Salvador’s president on a planned $1-billion program.

On Thursday, the Basel Committee on Banking Supervision published a consultation paper that placed Bitcoin in its highest risk category. As part of its recommendations, the global banking regulator called for banks keen on crypto exposure to hold $1 capital for every $1 worth of BTC held in custody.

El Salvador’s Bitcoin Adoption May Jeopardize IMF Negotiations: JPMorgan

JP Morgan says that El Salvador’s decision to adopt Bitcoin as legal tender is of little economic benefit.

JPMorgan is the latest source to respond to El Salvador’s decision to adopt Bitcoin (BTC) as legal currency within the country.

In a client note tweeted by @DocumentingBTC, the United States banking giant stated that there was little economic benefit to El Salvador adopting BTC as a parallel legal tender to the U.S. dollar.

JP Morgan on El Salvador adopting #Bitcoin

Notice the last line… pic.twitter.com/5hl0kR9WB0

— Documenting Bitcoin (@DocumentingBTC) June 11, 2021

On Thursday, El Salvador’s parliament passed a historic bill to recognize Bitcoin as legal tender. The “Bitcoin Law” bill passed by an overwhelming majority of 62 out of 84 votes.

Commenting On The Move, The JPMorgan Client Note Stated:

“As with the dollarization in the early-2000s, this move does not seem motivated by stability concerns, but rather is growth-oriented […] But it is difficult to see any tangible economic benefits associated with adopting Bitcoin as a second form of legal tender, and it may imperil negotiations with the IMF.”

Facing a potential $3.2 billion budget deficit in 2021, El Salvador is reportedly in talks with the International Monetary Fund for a $1 billion funding program.

Given the IMF’s role in providing access to external credit for nations like El Salvador, JPMorgan’s comments echo similar sentiments espoused by other market commentators as to the potential implications of the BTC adoption move.

Indeed, the IMF itself has raised issues the development by stating that El Salvador adopting Bitcoin as legal tender poses significant legal and financial ramifications.

Earlier on Friday, Benoît Cœuré, the head of the innovation hub at the Bank for International Settlements called El Salvador’s actions an “interesting experiment.” Cœuré, a noted Bitcoin critic once called BTC the “evil spawn” of the 2008 global financial crisis.

Meanwhile, on Thursday, the Basel Committee on Banking Supervision classified Bitcoin in its highest risk category advising banks to hold $1 capital for every $1 worth of Bitcoin held in custody.

El Salvador’s Bitcoin Beach Is The Crypto Economy

El Zonte, El Salvador (AP) — After El Salvador’s congress made the bitcoin legal tender this week, eyes turned to this rural fishing village on the Pacific coast. Known to surfers for its pounding waves, El Zonte has had the cryptocurrency in its economy for the past year.

Some 500 fishing and farming families use bitcoin to buy groceries and pay utilities, something the government envisions for the country at large. Bitcoin already was legal to use in El Salvador but its acceptance was voluntary, so the legislation passed late Tuesday now requires all businesses — except those without the technology — to accept payment in bitcoin.

El Zonte’s mini bitcoin economy 26 miles (43 kilometers) from the capital came about through an anonymous donor who started working through a local nonprofit group in 2019. Supporters of the financial change point to it as a demonstration case for how digital currency could help in a country where 70% of the people don’t have bank accounts.

President Nayib Bukele, who pushed through the bitcoin law, touts it both as a way to help those many Salvadorans without access to traditional banking services and as a path to attract foreigners with bitcoin holdings to invest in El Salvador, which is the first nation to make the cryptocurrency legal tender.

Experts are trying to figure out why Bukele is pushing bitcoin. They say it is unclear how the highly volatile cryptocurrency will be a good option for the unbanked and only time will tell if the new system translates into real investment in El Salvador.

Bitcoin, intended as an alternative to government-backed money, is based largely on complex math, data-scrambling cryptography — thus the term “cryptocurrency” — lots of processing power and a distributed global ledger called the blockchain, which records all transactions. No central bank or other institution has any say in its value, which is set entirely by people trading bitcoin and its value has moved wildly over time.

In El Zonte this week, construction worker Hilario Gálvez walked into Tienda María to buy a soda and snacks to share with his friends. Instead of reaching for his wallet, he paid through an app on his phone.

The store’s namesake, María del Carmen Avilés, said she is now expert in bitcoin transactions.

“When a customer comes I ask him if he’s going to pay with the application or in cash. The majority pay with the application Bitcoin Beach. I look for it on my cell to charge them.”

It doesn’t take more than two minutes.

“It’s easier than paying with bills,” Gálvez said. “I can buy from my house, do the transaction with the application Bitcoin Beach, and I just come to pick up what I need.”

Avilés notes that the volatility of the bitcoin can be a problem.

“People ask me if I recommend bitcoin, I tell them I’ve won, but I’ve also lost,” Avilés said. “When bitcoin hit $60,000, I won and I bought this refrigerated room for the store, but then it went down and I lost.”

Román Martínez was a pioneer in using bitcoin in El Zonte. He said the anonymous U.S. donor heard about community projects through the nonprofit Hope House where he works and began working through another American who lives in El Zonte. Hope House shares a building with Strike, a Chicago-based start-up that has been working with Bukele’s government on the nationwide bitcoin launch.

A request by The Associated Press to interview Strike CEO Jack Mallers was not granted. In an email, the company said, “Strike’s app is meant to empower people in all countries, broaden the financial system to include those who have been excluded, and increase economic opportunity around the world, and that is at the heart of this effort.”

El Salvador has used the U.S. dollar as its official currency since 2001, and Strike said that adopting bitcoin “as legal tender will help reduce its dependence on the decisions of a foreign central bank.”

Martinez said El Zonte residents did not have bank accounts, had no access to credit and were forced to handle all transactions in cash. “Now they are small investors whose lives have been changed by bitcoin,” he said.

Some question just how much can be learned from the Bitcoin Beach experiment.

David Gerard, author of “Attack of the 50 Foot Blockchain,” said El Zonte is an artificial demonstration.

At Bitcoin Beach, he said, “the bitcoins are traded inside Strike. They don’t actually move on the bitcoin blockchain or anything.”

Gerard said it appears to work because the bitcoin donor keeps pumping bitcoin into the village’s system. “That’s not a proof of concept that works. That shows that you can trade this stuff if you’re not trading actual bitcoins and someone massively subsidizes it.”

Adoption had been slow in El Zonte, but took off during the coronavirus pandemic when strict lockdown measures kept most people from leaving home.

“Our donor made three deliveries of $40, converted to bitcoin, for each of the community’s 500 families, and they were trained to use the application and now it’s normal to buy with bitcoin,” Martínez said.

El Zonte even has a Bitcoin ATM, which gives dollars in exchange for bitcoin or takes dollars and gives credit in bitcoin.

Edgar Magaña was in town from San Salvador to convert $50 to bitcoin. He inserted the dollars into the machine and was surprised to see only $47 in bitcoin fractions credited to his account on his phone.

“They took three dollars commission,” Magaña said, adding that he had understood there was no commission. “This is like in the banks.”

To spur national adoption, Bukele said the government would create a $150 million fund to allow people receiving payments in bitcoin to immediately convert them to dollars, reducing the risk of holding the fluctuating digital currency.

Jessica Velis, who runs the El Zonte business where the ATM is located, said some people here are already receiving remittances from abroad in bitcoin.

Salvadorans received some $6 billion in remittances last year from relatives living abroad, mostly in the United States. Bukele has said adopting bitcoin could save on the costs of sending that money home.

Not everyone in El Zonte is sold on the idea.

At Olas Permanentes, one of the town’s most popular restaurants, customers have been able to pay using bitcoin. But when the waitstaff was asked if they use it, they all said no. Some said they didn’t have higher-end cellphones needed to download the app, while others said they had doubts about how it worked.

“They pay me in dollars and in cash,” said one waitress, who declined to give her name.

Walking through town, a woman who only gave her name as Teresita, was asked if she used bitcoin. “Not me, I prefer to have the bills,” she said.

Updated: 6-12-2021

Adopting The Bitcoin Standard? El Salvador Writes Itself Into History Books

El Salvador has become the first country to make Bitcoin legal tender, but what are the complexities and potential short-term effects?

The cryptocurrency space and wider economic community continue to laud a historic move by El Salvador to recognize Bitcoin as legal tender. The Central American country has become the first in the world to do so, and the move has also spurred a handful of other Central and South American countries to begin taking steps toward that same eventuality.

Unsurprisingly, the move has made waves in the cryptocurrency community, with Bitcoin (BTC) proponents, in particular, highlighting the significance of the legislative change in driving cryptocurrency adoption. There have been some critics who have highlighted potential coercive undertones of the law, which has added intrigue to the situation, but the overarching response has been positive.

Things have moved quickly in El Salvador following the announcement from the country’s president, Nayib Bukele — which took place during the Bitcoin 2021 conference in Miami — that the country’s congress would be voting on the new legislation. In the space of a few days, Bukele’s plans to make Bitcoin legal tender became reality as the Salvadoran Legislative Assembly voted in favor of the new law on June 9.

The country’s president took things one step further when he tasked state-owned electricity producer LaGeo to begin exploring the possibility of powering Bitcoin mining using the country’s rich geothermal energy. No less than a day later, a new geothermal well had been drilled that Bukele said would power a Bitcoin mining facility in the near future.

Our engineers just informed me that they dug a new well, that will provide approximately 95MW of 100% clean, 0 emissions geothermal energy from our volcanos

Starting to design a full #Bitcoin mining hub around it.

What you see coming out of the well is pure water vapor pic.twitter.com/SVph4BEW1L

— Nayib Bukele (@nayibbukele) June 9, 2021

The move was even immortalized on the Bitcoin blockchain by mining firm Poolin, which included a Salvadoran newspaper headline reading “asamblea aprueba la ley bitcoin,” translating to “assembly approves the Bitcoin law,” into block 686,938 mined earlier this week.

This is reminiscent of Bitcoin’s pseudonymous founder Satoshi Nakamoto including a Times newspaper headline reading “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks” in the Bitcoin genesis block over a decade ago.

Bukele has also pledged to help Bitcoin users emigrate to El Salvador while touting the benefits of BTC no longer being subject to capital gains tax. As things move at breakneck speed in El Salvador, it’s worth taking a look at the wider reactions from the cryptocurrency community and the reverberations of the newly passed legislation.

An Overview Of El Salvador’s Bitcoin Law

El Salvador’s congress voted to pass President Bukele’s “Bitcoin Law,” which recognizes Bitcoin as legal tender alongside the U.S. dollar, with 62 of a total 84 votes in agreement with the new legislation.

The law will allow citizens to pay for goods and services in Bitcoin, and Bukele also stated that the Salvadoran government will guarantee the convertibility of Bitcoin into dollars at the time of any given transaction.

This is made possible by a $150-million trust established by El Salvador’s Bandesal development bank. In essence, the government will buy BTC from locals if they wish to receive dollars instead of BTC.

A point of contention is Article 7 of the legislation, which requires vendors or businesses to accept Bitcoin as a means of payment from customers, as it is now legal tender. Monetary economist and historian George Selgin raised important concerns over Articles 7 and 13 in a thread on Twitter, suggesting that they are coercive, in that they will force all Salvadoran merchants and companies to accept BTC as a means of payment.

Article 7 Reads: “Every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service.” Article 13 states: “All obligations in money expressed in USD, existing before the effective date of this law, may be paid in bitcoin.”

The renowned economist stated that the move was a “win for Bitcoin,” but he questioned whether it was a “win for freedom,” given that these articles will force Salvadoran businesses and vendors to accept BTC whether they want to or not. Selgin argued that Articles 7 and 13, which “qualify as ‘legal tender’ provisions,” essentially “undermine free choice in currency instead of promoting it.”

“This is a (relatively) rare instance of something being made compulsory tender not just in settling outstanding debts but in spot exchanges. As such it is even more contrary to the principle of choice in currency. Instead of merely allowing merchants to accept BTC in payment, article 7 compels them to do so even if they’d prefer to be paid in USD (or something else). Very few countries have such Draconian legal tender laws, which in the past were a last-resort of desperate governments.”

The economist called for cryptocurrency and Bitcoin proponents to rally against and condemn these specific clauses in the law. His critique was widely shared and provides a healthy dose of perspective to a situation that has received a lot of positive press.

Wider Community Lauds El Salvador’s Move

While Selgin’s arguments raise some poignant questions around El Salvador’s new currency law, there seems to have been widespread positive sentiment toward the country’s swift move to accept Bitcoin as legal tender.

Many prominent cryptocurrency and Bitcoin advocates have heralded the move as an important step toward more widespread adoption and acceptance of the preeminent cryptocurrency as a store of value and a means of payment. Paolo Ardoino, chief technology officer of Bitfinex, told Cointelegraph that he believes the move will serve as a major step in providing financial freedom:

“Bitcoin being accepted as a legal tender by El Salvador represents what we have said all along: Bitcoin has utility and is a viable alternative to fiat currencies. As we witness the implementation of digital currencies, I believe we will be seeing big steps for Bitcoin. This is a huge step for the financial freedom of humanity and a monumental moment for Bitcoin.”

Humayun Sheikh, CEO of Fetch.ai — a company building artificial intelligence for blockchain — highlighted the significance of first-mover advantage and suggested that countries like El Salvador will attract companies and individuals working in the cryptocurrency space, adding: “A handful of countries adopting Bitcoin or even buying Bitcoin to use as wealth reserves will increase their wealth and lend positive momentum to cryptocurrency adoption.”

Jeffrey Wang, head of Americas at Amber Group, echoed Sheikh’s sentiments in his correspondence with Cointelegraph, highlighting favorable regulatory moves as a key way to attract cryptocurrency- and blockchain-focused businesses: “The biggest cloud that hangs over the crypto industry is the uncertainty of regulation, so moving quickly now to embrace it as a country can be a significant advantage to attract capital and talent to your country.”

Wang also said that swift changes being made in the country could serve as a real-life test case for Bitcoin being adopted as legal tender, and there is the potential for it to be the catalyst for the country to become a hub for cryptocurrency businesses to thrive:

“By embracing it early, countries like El Salvador can help boost their domestic economies by welcoming the industry starting with miners where they can use ‘clean’ energy which also addresses the environmental impact of the miners’ use of electricity. It will also be a great early test case to see it [Bitcoin] used as a medium of exchange.”

Ardoino also highlighted the role that cryptocurrencies could play in helping Central and South American countries grapple with long-term economic problems that have plagued their currencies and people: “Bitcoin has resonated for the benefits that it may bring to the tragedy we’ve witnessed in South American economies. The potential it has to bring financial freedom to the region shouldn’t be understated.”

What Can We Expect In The Short Term?

With the new Bitcoin Law passed in El Salvador, there is now keen interest in the short-term changes that will be felt in the country and beyond. Sebastian Ramirez, head of business operations at bitFlyer USA, told Cointelegraph that a large number of everyday individuals could become less skeptical about Bitcoin and start looking at it as a viable alternative to their existing solutions and see it as a better store of value.

Ramirez also noted that the law change in El Salvador may remove some barriers to entry, like having to pay tax when using Bitcoin. He also conceded that the law change might not lead to an immediate shift in perception in the country and beyond:

“A significant majority of the population may still not feel savvy/comfortable enough to use Bitcoin and bear its risks. I don’t expect most locals will benefit from this change in the short-term, but as the space grows and Bitcoin becomes more stable, it will become a tremendous alternative.”

Wang conceded that there might be some teething problems, as vendors and businesses in the country still need to set up the necessary infrastructure to begin accepting BTC. Furthermore, people may be reluctant to spend their BTC on everyday purchases, given the cryptocurrency’s increased use as a store of value first and foremost: “I imagine for the majority, they hold BTC for the longer term potential price appreciation so spending it to buy bread today when it can double in a week will be too high an opportunity cost.”

IMF Raises Red Flags

The speed at which El Salvador passed its historic Bitcoin Law has made it difficult for major financial and economic regulatory bodies to react or intervene. Nevertheless, the International Monetary Fund raised some concerns around the move in a press conference on June 10.

IMF spokesperson Gerry Rice stated that consultations will take place with the Salvadoran government. The IMF has been in talks with the country to provide over $1 billion in financing: “Adoption of Bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis. So, we are following developments closely, and we’ll continue our consultations with the authorities.”

Some in the global community have also posed questions around the timing of Bukele’s move to swiftly adopt Bitcoin as legal tender alongside the U.S. dollar, which has served as the Central American country’s reserve currency since 2001.

Ramirez gave his opinion on the timing of the move: “The main reason here is the race to become a Bitcoin hub in Latin America.” He added, “This announcement is putting El Salvador on the map and attracting a lot of foreign interest, which applies pressure on other Latin American countries who don’t want to be left behind.”

Sheikh believes that “As a PR move, the timing was probably set to accommodate the Bitcoin Miami conference.” He further suggested that timing could also factor in ongoing developments in China, where the government is beginning to take a harder line toward Bitcoin mining operators:

“The news comes at a time of a clampdown of coal-based mining operations in China and a surplus of mining hardware that needs to be relocated. With its abundance of renewable geothermal energy, El Salvador stands to benefit from these developments and improve the image of Bitcoin mining as a ‘dirty’ process.”

Nevertheless, all eyes are now on El Salvador and Central America. The country is laying the foundation for the adoption and widespread use of Bitcoin as means of payment and has promised to build essential infrastructure to facilitate large Bitcoin mining operations powered by clean geothermal energy.

Updated: 6-13-2021

Is El Salvador Bitcoin’s Green Savior?

El Salvador’s move to make bitcoin legal tender offers an opportunity to prove that cryptocurrency can power renewable energy development, says CoinDesk’s chief content officer.

Well, the giant Bitcoin Miami love fest conference turned out to be more than just late-night beach parties. It actually delivered some news – a bombshell announcement big enough to quell concerns about the event being a COVID-19 superspreader event.

All week, the crypto world has been alight with the news that the Central American country of El Salvador will become the first nation to treat bitcoin as legal tender.

The implications of that announcement dominate this week’s newsletter. In particular, the main column focuses on the prospect of also spurring renewable energy development across the country via a system of bitcoin-funded community microgrids.

Bitcoin And Green Energy: El Salvador’s Leapfrog Chance

Possibly the only thing this week that got bitcoiners more excited than El Salvador President Nayib Bukele’s move to make bitcoin legal tender was his followup that bitcoin miners will get access to geothermal power from volcanoes.

The bitcoin community is not only celebrating a new Central American haven but pointing to El Salvador as a proving ground for “green” bitcoin. Because geothermal plants draw their energy from an existing, naturally occurring heat, their carbon footprint is minimal.

But I think El Salvador (population 6.4 million), one of the poorest countries in the Western Hemisphere, has an opportunity to make a far more groundbreaking energy play than the buzz generated by linking a volcano to a bitcoin mine.

A Humble Proposal: The government should work with miners, local community leaders and foreign investors to strategically fund the expansion of the country’s electricity coverage, specifically via a decentralized network of cheap, clean, cyber-secure, and community-empowering solar or wind-power microgrids.

The best way to overturn the flawed narrative – most recently furthered by U.S. Sen. Elizabeth Warren – that bitcoin will destroy the planet if we don’t curtail it is to demonstrate the opposite: that miners prefer low-cost green sources of power and that they can be a force multiplier for green energy infrastructure at large.

If executed properly, El Salvador’s bitcoin project could achieve a host of the United Nations’ Sustainable Development Goals (SDGs) in one shot. That’s a story I’d love to tell.

Underwriting Green Economic Development

While Warren, Elon Musk and others have been beating the drum about Bitcoin’s energy usage exceeding Sweden’s, bitcoin mines are being deployed in multiple locations across the world, not only to tap existing renewable or stranded energy sources such as wasted natural gas destined for flaring, but to underwrite the development of green electricity infrastructure to serve wider communities.

In a recent episode of our “Money Reimagined” podcast, Harry Sudock, vice president of strategy at mining infrastructure provider GRIID, told us his company is seeing relentless demand from wind, hydro and solar developers for bitcoin mining; co-locating facilities offers revenue guarantees that allow communities to expand renewables to serve local people.

Without those guarantees, these enterprises tend to stall because they depend on bureaucratically administered and sparsely distributed government subsidies to fund their rollout.

In other words, bitcoin mining can serve as that missing piece of risk capital needed to kick-start infrastructure projects, not only to shift the world toward renewable energy but also to foster economic development. There are deep-pocketed companies ready to do this – payments provider Square, for example, which is investing $5 million into a new bitcoin-driven solar facility run by Blockstream.

To maximize the social impact of this effort, we need to look beyond large-scale, state-run, centralized energy projects such as El Salvador’s geothermal plants and seek ways to fund community-based green power projects run as regional microgrids.

A decentralized network of such grids would provide what power experts call “redundancy,” creating multiple backups to offset the vulnerability of the centralized national grid to outages caused by weather or other disruptions. (For a sense of why centralized systems are more vulnerable, think of the tens of millions of people along the U.S. Eastern Seaboard who were impacted by a single ransomware attack on the Colonial Pipeline. A decentralized structure gives hackers a smaller payoff in terms of disruption.)

Most importantly, if bitcoin miners source their power from local, community-based grids, their payments for it – transferred in newly legal tender bitcoin – will go to those communities, providing a steady long-term source of income. (Ideally, microgrids would be governed as cooperatives, or even as distributed autonomous organizations, or DAOs, to ensure wide distribution of proceeds and that there is accountable reinvestment in sustainable development.)

With those funds in hand and new, more widely distributed, reliable, low-cost sources of electricity available, local entrepreneurs could, for example, build out a network of charging stations, creating the foundation for local businessmen to spin up electric vehicle transport services. There’d be power to pump water into farmers’ irrigation systems.

They could expand cell phone services, which are vital for bitcoin payment apps such as Lightning-based Zap, whose CEO, Jack Mallers, was instrumental in President Bukele’s bitcoin awakening.

The geothermal mining proposal is not antithetical to this idea. Bitcoin payments to the national geothermal energy company, LaGeo, would go to upgrading and maintaining the national system into which the microgrids are integrated to provide greater security and reliability. Or, in a direct application of the so-called “money battery” concept, energy tariff payments to the government by bitcoin miners could fund the development and maintenance of the microgrids in other places.

“The history of El Salvador shows that the concentration of power leads to the country’s elites controlling the government, and that leads to human rights abuses,” Geoff Thale, president of the Washington Office on Latin America, a think tank in Washington, D.C., said in an interview. “That’s why El Salvador had a civil war, that’s why most Salvadorans who have been here for years came to the US in the first place.”

For Her First Major Task As VP, Kamala Harris Is Handed A Thorny Diplomatic Mission

Indeed, the ousting of the top prosecutor and judges sends a defiant and troubling message. Bukele’s party alleges the five judges had blocked the government’s public health response to the coronavirus pandemic and that the president and his cohort are “cleaning our house,” as Bukele tweeted.

A nuestros amigos de la Comunidad Internacional:

Queremos trabajar con ustedes, comerciar, viajar, conocernos y ayudar en lo que podamos.

Nuestras puertas están más abiertas que nunca.

Pero con todo respeto:

Estamos limpiando nuestra casa.

…y eso no es de su incumbencia.

— Nayib Bukele 🇸🇻 (@nayibbukele) May 2, 2021

Flip The Debate

For those who believe bitcoin’s offer of a censorship-resistant, programmable, universally accessible source of digital currency is a positive force for the world, projects like this provide an opportunity to sway public opinion and get people to recognize that it can drive sustainable growth opportunities if managed properly.

We need to table the dysfunctional debate about bitcoin’s environmental impact. Critics focus on bitcoin’s energy consumption, but it’s the wrong lens. El Salvador and so many other poor countries need to consume more, not less, energy if they are to prosper. And excessive consumption is only a problem if the resource is finite, which is not the case with solar, wind or geothermal energy.

The problem is bitcoin’s mining’s source of energy. And the reality, one that too many crypto advocates ignore, is that bitcoin does access a massive amount of fossil fuel energy.

Its carbon footprint is by no means small and will grow bigger as usage expands unless deliberate actions are taken to reduce it.

We need policy actions that can put both sides of this debate into a more reasonable context. El Salvador can lead the way – especially given the interest among other Latin American leaders to follow its example.

Still, to ensure the spoils of development are spread among host communities and to keep miners and grid operators in a symbiotic contractual relationship that serves the interests of both, regulation is needed. Rules can be set for minimizing mining activity during peak hours to manage the “duck curve” problem caused by unused solar capacity and for ensuring there is constant reinvestment in capacity for the community at large.

The question is, will Bukele’s government, which has been accused of authoritarianism and has resisted efforts by U.S. President Joseph Biden to expand regional anti-corruption efforts, seize the initiative to spread the wealth? Or will corrupt officials and wasteful state companies monopolize the bitcoin windfall?

Well, here’s an opportunity for the Biden Administration to strike a deal.

Deeply poor El Salvador is one of the biggest sources of undocumented immigrants crossing through Mexico into the United States. If the U.S. sees the big picture here, it should take a more positive stance towards El Salvador’s Bitcoin policy than we’re currently hearing from Washington – the U.S.-dominated International Monetary Fund expressed concerns Thursday about it.

It can help the country leverage the opportunity to develop prosperity among the very communities that are sending their people on those treacherous journeys to the U.S.

Remittance Firms Hesitant To Support BTC Despite Legal Tender Law In El Salvador

Remittance firms operating in El Salvador appear reluctant to support Bitcoin despite the country’s new law mandating the crypto asset as legal tender.

Despite El Salvador’s recently passed law mandating Bitcoin as legal tender, local remittance firms are reportedly hesitant to adopt Bitcoin (BTC).

Speaking to Reuters, Autonomous Research fintech analyst Kenneth Suchoski argued that remittance firms are unlikely to launch support for Bitcoin and other crypto assets until prompted to do so by customer demand, likely creating a stalemate for the local payments industry.

“For Western Union and some of the other remittance providers, keep in mind that most of the volume in the remittance industry is going from developed markets to emerging markets primarily to people — families and friends — that operate in cash,” he said.

Suchoski Estimates That Less Than 1% Of Global Cross-Border Remittances Are Conducted Using Crypto Assets, Adding:

“To the extent that bitcoin isn’t adopted and there’s not widespread acceptance, these remittance providers are still going to be relevant for the years to come.”

Global payments firm MoneyGram International also emphasized the challenge of navigating undeveloped infrastructure enabling ramps between crypto assets and local fiat currencies in emerging economies.

“We’ve built a bridge to connect bitcoin and other digital currencies to local fiat currency,” a MoneyGram representative told Reuters, adding:

“As crypto and digital currencies rise in prominence, a core barrier to further growth is the on/off ramps to local fiat currencies.”

Last month, MoneyGram revealed a partnership with Coinme to enable users to buy and sell crypto assets using U.S. dollars at 12,000 retail locations across the United States.

Suchoski also emphasized the compliance burden of supporting crypto assets for payments firms, noting that Western Union’s annual compliance costs had nearly doubled from around $100 million to $200 million over roughly the past decade.

Can Bitcoin Ever Replace Fiat Currencies?

El Salvador’s bold move to accept Bitcoin as legal tender has Wall Street once again wondering whether a cryptocurrency could really ever replace the old-school dollar.

It’s a question that appeared, at least to some, to already be nearly answered after a handful of trailblazing companies — including Tesla Inc., MicroStrategy Inc. and Square Inc. — incorporated Bitcoin into their balance sheets without igniting a broader corporate revolution. Now, the focus is turning to governments.

El Salvador, which started using the U.S. dollar as its currency more than 20 years ago, last week became the first country in the world to pass legislation allowing use of Bitcoin in any transaction. President Nayib Bukele says the point is to counter the fact that relatively few citizens have bank accounts and to cut the cost of sending remittances, or money that workers ship back to their families in El Salvador from other countries.

Some observers wonder whether a bigger movement is afoot: replacing a conventional currency — the dollar, the titan of global commerce and finance — on a national scale and then beyond.

The answer, at least for Julian Sawyer, chief executive officer of Bitstamp, one of the world’s longest-running crypto exchanges, is not quite yet.

“There’s been a lot of people who have sat in the crypto world who’ve said, ‘Oh, crypto is going to take over the world and traditional banks and central banks will go away,’” he said in a telephone interview from London. “That’s not going to happen.”

While the technology itself may be used increasingly in the behind-the-scenes plumbing of financial services, such as money being sent across borders, Sawyer said Bitcoin is still too volatile to fully replace the dollar, though it may become part of the mix.

“Will there still be the dollar? Yes,” he said. “Will there still be Visa and Mastercard? Absolutely. It will just be we’ll have alternatives for using plastic, or paper, or coins or checks.”

El Salvador’s central bank president also said on state television that Bitcoin would not replace the greenback in the nation.

The dollar is stable, especially when compared with Bitcoin’s explosive price moves. And whereas the dollar usually fluctuates for mundane reasons, crypto can be swayed by tweets, memes and Elon Musk — not a great fit for a national or global currency.

Bitcoin quadrupled last year, while the Bloomberg Dollar Spot Index slipped 5.5% — a fairly big number for the greenback. Since mid-April, Bitcoin has lost nearly half of its value.

Bank of America Corp. research shows Bitcoin is about four times as volatile as the Brazilian real and Turkish lira — and neither of those is anyone’s model of stability.

“Bitcoin injects extra volatility,” which is counterproductive for countries looking for stability, said Marc Chandler, chief market strategist at Bannockburn Global Forex. “Why do countries peg their currency to another currency or have a currency board or have a dollarized economy? It’s because their currency has become too volatile or lost credence in the market and become out of control, very inflationary.”

Test Case

That doesn’t mean other countries won’t look to El Salvador as a test case for what can happen, especially those that benefit from remittance flows or have central banks already researching or piloting cryptocurrencies of their own.

“Countries can’t just look away from this option now,” said Valkyrie Investments CEO Leah Wald, who previously worked for the World Bank. “For the longevity and health and well-being of Bitcoin, and the Bitcoin network, this is the dawn of a new day.”

Nations from Haiti to Guatemala, South Sudan and Liberia could be next to adopt Bitcoin given their dependence on remittance inflows, high poverty and low financial inclusion, according to Rahul Shah, Tellimer Ltd.’s head of financials equity research.

Other dollarized economies — those, like El Salvador, that are based on the greenback — are also candidates to officially adopt Bitcoin and become less dependent on the Federal Reserve and U.S. policies.

“It potentially gives the ability to not be as beholden to the dollar over the long term, and be more independent of the existing financial system,” said Brad Bechtel, global head of currencies at Jefferies. “Once you see one country go that way, it wouldn’t surprise me to see more.”

Ecuador, which has been dollarized for two decades, could also consider Bitcoin, said Emily Weis, a global macro strategist at State Street Corp. Colombia and Mexico, meanwhile, would risk disrupting their local currencies, even if they have large remittances and crypto interest among the local populations, she said.

“Many EM populations already have an affinity for cryptocurrencies given capital controls, fragile local market dynamics, and volatility of local currencies,” Weis said.

There’s Also The Related Business Opportunities: El Salvador’s Bukele, for example, is using the new law as a way to stoke interest in mining Bitcoin in the coastal country. He ordered the president of the state-owned geothermal electric company to make plans to offer greener mining facilities.

“All it takes is one small domino and eventually it can create real change,” said Alex Tapscott of Ninepoint Partners LP, which has a Bitcoin ETF in Canada.

This is a unique opportunity for everyone. Let’s not squander it.

Updated: 6-15-2021

Max Keiser Suggests El Salvador To Float Bitcoin ‘Volcano Bonds’ To Retire The IMF Loans

El Salvador passed the historic Bitcoin law making it the first country to make Bitcoin a legal tender. Soon as the Bitcoin law comes into action in the next 90 days, merchants will start accepting it against their goods and services.

However, the International Monetary Fund (IMF) raised objections citing legal and economic concerns relating to the new Bitcoin Law. Besides, the IMF also assured that they would grant a $1 billion loans to help the Latin American country to overcome the economic challenges.

However, Bitcoin evangelist Max Keiser has a suggestion to get rid of the IMF loans by floating Bitcoin ‘Volcano Bonds’ backed by future Bitcoin mining revenues.

This suggestion came as El Salvador President Nayib Bukele is keen on developing green energy “Bitcoin mining hubs” by using the geothermal energy from the nations 22 major volcanic locations. Last week, the President tweeted:

“Our engineers just informed me that they dug a new well, that will provide approximately 95MW of 100 percent clean, zero-emissions geothermal energy from our volcanos. Starting to design a full Bitcoin mining hub around it.”

Responding To This Tweet, George Kikvadze Of The Global Blockchain Business Council Said:

“Dear President Nayib Bukele, 95MW can generate 3 Exahashes which is around 600 bitcoin in revenue per month or $250 mln per year. I am confident with these metrics you can structure a proper JV with credible investors and take care of IMF once and for all.”

Max Keiser: Bitcoin Will Probably First Kill the IMF

Holding no words back, Max Keiser said that Bitcoin is set to take down the central banks and the IMF is the first on its list of targets. Speaking to Express UK, Keiser also predicts that Bitcoin will rise to become the reserve currency of the world and central banking giants like America’s Federal Reserve and the Bank of England are at the risk of being “disintermediated”.

Interestingly, Keiser has also proposed El Salvador float Bitcoin ‘Volcano Bonds’ to fund to finance its geothermal Bitcoin mining operations. Speaking to Express UK about El Salvador’s move, Max Keiser said:

* “I’ve advised El Salvador to create new ‘Volcano Bonds’ backed by future bitcoin mining revenues to recapitalise their balance sheet and retire the IMF loans. I know of two banks in New York that are working on this now.

* Property prices in El Salvador are set to triple this decade as several countries in the region; Argentina, Guatemala, Paraguay and others will announce shortly they are following El Salvador’s example”.

Keiser has also requested the Galaxy Investment Partners to float $1 billion in Bitcoin ‘Volcano Bonds’ in order to repay the IMF loan.

Bitcoin Community Planning To Lend El Salvador $1 Billion To De-Enslave It From The IMF
Updated: 6-16-2021

Steve Hanke Warns BTC Could ‘Completely Collapse The Economy’ Of El Salvador

Steve Hanke slammed El Salvador’s Bitcoin adoption as legal tender and questioned how Bitcoin would function in day-to-day transactions.

Steve Hanke, a professor of applied economics at Johns Hopkins University, has warned that El Salvador’s recent adoption of Bitcoin (BTC) as legal tender has the potential to “completely collapse the economy.”

Steve Hanke served as a senior economist under President Ronald Reagan’s administration from 1981 to 1982. Hanke has previously described BTC as a speculative asset “with a fundamental value of zero,” and in April, the 78-year-old tweeted, “Cryptocurrencies are the future of money. Bitcoin is not.”

Speaking with streaming financial news provider Kitco News on Tuesday, the university professor noted that BTC hodlers from regions such as Russia and China could now target El Salvador to cash out their holdings — essentially draining the country of its United States dollars:

“It has the potential to completely collapse the economy because all the dollars in El Salvador could be vacuumed up, and there’d be no money in the country. They don’t have a domestic currency.”

During the interview, the economist described the elected representatives in El Salvador who voted in favor of president Nayib Bukele’s Bitcoin law as “in a word, stupid,” and questioned how BTC could function as a legal tender in day-to-day transactions, in a country where most citizens rely on cash.

“You’re not going to pay for your taxi ride with a Bitcoin. It’s ridiculous […] You’ve got 70% of the people in El Salvador don’t even have bank accounts,” he said.

On Friday, JPMorgan echoed similar sentiments but in more measured language, with the firm stating in a client note that it was difficult to see any “tangible economic benefits associated with adopting Bitcoin as a second form of legal tender, and it may imperil negotiations with the IMF.”

The Central American Bank for Economic Integration doesn’t share this view, however, and stated yesterday that El Salvador’s adoption of BTC is innovative and “creates many spaces and opportunities.”

The multinational bank also revealed that it will be forming a technical advisory group to aid El Salvador in its transition to using Bitcoin as legal tender.

Hanke speculated that “dark forces are clearly behind this” in El Salvador, who want to use Bitcoin to get their hands on U.S. dollars.

The economist also described remittances across borders in Bitcoin as “nonsensical,” as he thinks the asset will need to be converted instantly to dollars to be able to use it.

“If grandma is down in El Salvador is waiting for her remittances and you want to send Bitcoin like that, it’s fine, but what does she do? She has to go to the ATM to get dollars because that’s the only way you can buy something,” Hanke said. However, businesses in El Salvador will be mandated to accept Bitcoin.

An article in Foreign Policy by trenchant Bitcoin critic David Gerard, author of the book Attack of the 50 Foot Blockchain, speculated that as El Salvador can’t print U.S. dollars, its adoption of BTC may be part of a move to source U.S. dollar liquidity from its citizens to pay back foreign debts.

Updated: 6-17-2021

World Bank Refuses El Salvador’s Request For Help On BTC Transition

The World Bank has refused to support El Salvador’s request for help in the transition to use Bitcoin as legal tender.

The World Bank has refused El Salvador’s request for help on the country’s transition to adopting Bitcoin (BTC) as legal tender.

It cited issues with Bitcoin’s environmental impact and transparency as reasons why it will not support El Salvador’s move to adopt Bitcoin as an officially accepted currency.

“While the government did approach us for assistance on Bitcoin, this is not something the World Bank can support, given the environmental and transparency shortcomings,” a World Bank spokesperson said.

The World Bank did note, however, that it can help El Salvador in other ways, including “currency transparency and regulatory processes.”

Earlier on Wednesday, Salvadoran finance minister Alejandro Zelaya said the Central America country had sought technical assistance from Banco Mundial (the World Bank).

“I want to announce that we have requested technical assistance from @BancoMundial, so that like @BCIE_Org, they can accompany El Salvador in the implementation and regularization of #Bitcoin as legal tender.”

Prominent Bitcoiners weren’t pleased with the World Bank’s refusal, but nor were they particularly surprised.

Bitcoin proponent Anthony Pompliano tweeted in response to the news that “the World Bank hasn’t figured out how to make money off bitcoin.”

Samson Mow, chief strategy officer of blockchain development firm Blockstream and creator of blockchain game Infinite Fleet, was irritated by the news — and called for The World Bank to be made obsolete.

BREAKING: WORLD BANK CANNOT HELP EL SALVADOR MAKE WORLD BANK OBSOLETE. pic.twitter.com/gLReCZXC4r

— Samson Mow (@Excellion) June 17, 2021

While president Nayib Bukele’s Bitcoin law has sparked a lot of excitement from Bitcoin proponents across the globe, it has also received a lot of criticism. Yesterday, economist Steve Hanke said that El Salvador using Bitcoin as a legal tender may “completely collapse the economy.”

The International Monetary Fund (IMF) is also not keen on El Salvador’s embrace of Bitcoin. Cointelegraph reported on Friday that it may hamper negotiations with the IMF over a $1-billion loan to support the country’s economy.

IMF spokesperson Gerry Rice noted the adoption of Bitcoin presents a number of financial, legal and macroeconomic concerns that require a “very careful analysis.”

30 foreign business leaders coming to visit Bitcoin Beach tomorrow -to see how they can invest in El Salvador. Just this morning had 2 companies tell us they already have lawyers setting up their legal business entities. @nayibbukele has opened the jobs floodgates #Bitcoin

— Bitcoin Beach (@Bitcoinbeach) June 16, 2021

But some companies are rushing to help. Athena Bitcoin indicated it would move quickly to provide Bitcoin ATMs across El Salvador. On Twitter on Thursday, the firm asked Bukele if “1000 ATMs” were enough, with the president replying in jest “1,000? How about 1,500?”

On Wednesday, El Salvador Minister of Labor and Social Welfare Rolando Castro denied claims that the ministry had begun discussing the option to use Bitcoin for employee salary payments, noting that it was “too premature to talk about wages.”

Bitcoin Beach: What Happened When An El Salvador Surf Town Went Full Crypto

An anonymous donor turned a tiny Pacific coast town without a bank into the world’s biggest Bitcoin experiment. Up next: the entire country.

Before the tears start falling, the subject gripping the room is inflation. “We’re seeing [an] unprecedented amount of monetary expansion from central banks right now,” says Jack Mallers, pacing the stage like an evangelist stoking his audience.

“It’s very scary.” The scene resembles a tropical TED Talk, one given by a crisply tanned, hoodie-clad 27-year-old who looks like he washed ashore from a night of clubbing. It’s Bitcoin 2021, a two-day confab in Miami in early June, where 12,000 techno-anarchists, Wall Street bankers, and the crypto-curious swarm to conspire about the future of Bitcoin.

Mallers, the founder of a Bitcoin money-transfer startup called Strike, swiftly maneuvers from inflation and the farce of the Federal Reserve to deliver the real subject at hand: financial injustice in the developing world.

In El Salvador, he says, a country that two decades ago abandoned its own currency for the U.S. dollar, 70% of the population is unbanked and many get their income through remittances saddled with outrageous fees. Where, as he tells it, people are left with little choice but to flee their homeland, resorting to crime and violence. “But if you rewind those steps,” Mallers says, “if you can fix the money—you can fix the world.”

Now come the tears. Mallers, his voice cracking, explains that that’s why he moved to a little town in El Salvador for three months, to help these people while also launching his company there. “I talked to the kids,” he says, flashing photos of himself with young Salvadorans on the oversize screen. “I told them, ‘Man, we got this. Bitcoin’s here. We got this.’ ”

By the time he gets to the part about El Salvador’s president asking him to help write the bill that would turn Bitcoin into legal tender—teeing up a video from President Nayib Bukele making the announcement—Mallers is practically weeping. Then he rips off his hoodie to reveal a Salvadoran soccer jersey gifted to him by the politician himself. The crowd goes wild.

The Bitcoinification of El Salvador has been under way for a while now. Bukele had been tinkering with the cryptocurrency even before winning office in 2019.

The millennial politician and members of his Nuevas Ideas political party have owned Bitcoin for years, according to two people in the government who didn’t want to be quoted commenting on the president’s finances. Bukele even hinted at his desire to adopt the cryptocurrency in 2017, when he was San Salvador’s mayor, tweeting, “we will use Bitcoin.”

The best place to see where El Salvador is going with all this is El Zonte, a surfing village on the country’s Pacific coast. In 2019, a small team of Salvadoran volunteers and an American expat started to transform the local economy to run on Bitcoin.

Workers now receive their salaries and pay bills in Bitcoin, tourists can buy pupusas with a special Bitcoin payment app, and community projects are financed with Bitcoin donations. According to Jorge Valenzuela, an upbeat 32-year-old surfing aficionado who leads the volunteers, “it has changed my town.”

In early May, a month before Bukele made the announcement, I spent four days in El Zonte. To get there from the two-lane highway that snakes along El Salvador’s Pacific coast, you take a rutted-out road past corrugated-metal fencing and street dogs sleeping under mango trees.

You’ll see the black, volcanic sand beach, rolling waves, and a point break that has turned this town of 3,000 into a destination for foreigners with surfboards.

But the most striking thing these days is the orange “B”—the international symbol for Bitcoin—splashed on garbage cans, near the entrance of the dirt-floor pizza joint, and hanging on the wall near the surf shack at the beachfront hotel. The town has never had a bank. Now the lone ATM buys and sells Bitcoin.

On a breezy, warm evening, Mallers and an international crew of Bitcoin influentials gather over freshly caught red snapper on the deck of Garten, a swanky modern hotel with sweeping views. In 2019 an anonymous American donor started seeding El Zonte with Bitcoin. “Bitcoin Beach,” as the project organizers have since dubbed it, has at once become a controlled alt-currency experiment, a philanthropic endeavor, and a capitalist calling with a whiff of savior complex.

The crew of foreigners came to town either to witness the experiment firsthand or figure out how to export it elsewhere. Peter McCormack, a tattoo-covered Brit who hosts What Bitcoin Did, the world’s most popular Bitcoin podcast, is on an extended stopover before a trip to the U.S. Miles Suter, who helps run the Bitcoin business for Square Inc.’s Cash App, has lived intermittently in El Zonte since he came to check out the project last year.

A guy who introduces himself only as “Dread” turns up, fresh from the airport, hoping to learn the secrets of Bitcoin Beach so he can replicate them in the outskirts of Kingston, Jamaica, he says.

Over dinner, they share stories of becoming disillusioned with the global economic system, the vitriol and polarization among Bitcoiners on Twitter, and “shitcoiners”—what Bitcoin monogamists call people who trade in other cryptocurrencies. It’s the contentious crypto debate common among those fortunate enough to be from a prosperous economy, where Bitcoin is as much about a belief system as it is about a financial one.

In El Zonte, Bitcoin is a possible solution to an actual problem, as opposed to a solution in search of a problem, which is how critics describe its role in, say, the U.S. Emerging economies adopting new technologies before more established ones is nothing new.

Brazilians were early users of mobile banking because it was a faster way to move around money, which during the days of hyperinflation was a rapidly wasting asset. Digital wallet apps have taken off in countries such as India and Kenya, where a large proportion of the population is unbanked.

Latin America, a region long afflicted by wobbly currencies, is particularly fertile ground. Three years ago, Venezuela became the first nation to launch a central bank-backed digital currency, dubbed the petro.

“What’s different about what’s happening down here in El Zonte is the level of adoption and the circular nature,” Square’s Suter says. “You see it spreading from family to family and down the coast from town to town.” Suter is an Ivy League-educated former lacrosse player who was fired from his job as a Wall Street equities trader because he participated in the Occupy Wall Street protests.

He found purpose in Bitcoin’s potential, especially in countries in distress, and visited El Zonte last year on his way to check out how Argentines were using it. He continues: “Bitcoiners around the world have found a country to be rooting for.” If anyone at the table knows that El Salvador will soon become the first country to deem Bitcoin as legal tender, nobody says so.

As the evening wears on, McCormack orders a bottle of red wine. Most of the hotel staff have packed up and gone. The group talks about Bitcoin Beach-type projects taking hold in other countries, perhaps Venezuela and Lebanon, where currency collapses robbed people of their savings.

“What we need to do,” McCormack says, glancing at Michael Peterson, a 47-year-old California native and the improbable father of Bitcoin Beach, “is clone this guy.”

A day earlier, I visited Peterson’s office just down the hill from the bustling highway in a two-story, off-white building that Bitcoin Beach now shares with Mallers’s Strike. Peterson first came to El Zonte 17 years ago on a surfing trip, long before it was a tourist hot spot, and loved it. He was running a family food concession business in California.

During the offseason, he and his wife, Brittney, and their children began splitting time between their home in San Diego and El Zonte. The Petersons supported missionaries they met through their evangelical Christian church in San Salvador and started funding small development projects, working with local churches and community groups.

Then, in early 2019, Peterson—who still uses an old-school EarthLink account—was introduced to an unidentified donor through a connection he made at the church. The proposition he heard seemed more like a scam: An anonymous donor in California had purchased a cache of Bitcoin that was presumably now worth a fortune.

Through an adviser, the donor told Peterson he wanted to create a local economy that ran on Bitcoin, the only condition being that it wouldn’t be cashed out into a fiat currency. Peterson thought about it, grew intrigued, and decided to go for it.

“It allows everybody from the poorest to the richest to participate on the same playing field,” he says. “I really felt like, ‘Man, this is something that can change El Zonte.’ ” He says he still doesn’t know the donor’s identity.

By mid-2019, Peterson had drafted a plan to create a Bitcoin economy and recruited a small staff of El Zonte residents that he and Brittney had worked with for years. After an inauspicious attempt to convince older adults, they targeted the town’s presumably least tech-resistant—paying its teenagers in the digital coins to pick up trash along the river. Then Valenzuela, the project’s coordinator, persuaded a single store in town to accept Bitcoin as payment.

But it was the pandemic that ultimately jump-started the project. When El Salvador’s tourism industry and El Zonte’s economy collapsed, Peterson started making monthly transfers of about $35 in Bitcoin to 500 families around town. He used Wallet of Satoshi, one of the many existing smartphone apps created for small transactions using Bitcoin, which is notoriously impractical—expensive and slow—for everyday purchases.

As more stores began asking how they could accept Bitcoin, Peterson decided El Zonte needed its own app. The Bitcoin Beach Wallet, which launched in September, similarly uses technology that allows for small transactions. It shows users how much they hold in Bitcoin and greenbacks and where they can spend it.

Shops in town price everything in dollars, whether the underlying transaction is in Bitcoin or not. A cappuccino always costs $3.50, even if Bitcoin’s value has just jumped or dropped. In this way, it behaves more like a token than a currency.

The town’s embrace of Bitcoin is apparent just by looking at the app. Peterson slides his finger across his iPhone, the screen blooming with red dots, each one representing one of the roughly four dozen businesses that accept Bitcoin as payment.

The dots look like a rash spreading from Peterson’s headquarters across town and up and down the coast. He says that 18 months after the project launched, roughly 90% of El Zonte’s households are interacting with the currency regularly.

“It’s crazy how fast Bitcoin has caught on,” he says. Businesses are using it on their own to pay bills and accept payments. Residents use transfers to the Strike app, the ATM, and peer-to-peer transactions to move money back and forth between Bitcoin and cash.

There’s also a local woman who has turned into a market maker. She buys Bitcoin from town residents when they need cash and then deals it to eager investors, many of whom come from San Salvador, where the digital currency has been next to impossible to purchase.

“Bitcoin Beach” has become a controlled alt-currency experiment, a philanthropic endeavor, and a capitalist calling with a whiff of savior complex.

For some in El Zonte, the benefits of Bitcoin have been incremental at best. Many business owners say it makes up just a small fraction of sales. Although some 85% of families have access to smartphones, many still live in cramped houses with dirt floors and tin roofs. But for others, it’s clearly been life-altering.

A construction crew chief pays his dozen or so employees in Bitcoin. He was sick of losing them for a half-day every month so they could travel to the nearest bank, an hourlong bus ride away, on payday. Adrian Torres, 62, one of the crew, tells me he fixed his teeth with the money he saved in Bitcoin, and now he’s saving up to buy a cow.

Maria del Carmen, a mother of six, says she was skeptical about storing money on her phone. She reluctantly started accepting payments for her tiny eatery, run out of a kitchen in front of her home.

Bitcoin now accounts for as much as half of her roughly $45 a day in sales. Four of her children have migrated to the U.S., where approximately 2.5 million Salvadorans live and send home $4.5 billion a year in remittances. Now, instead of receiving money from her daughter in California, del Carmen sent her $2,000 from Bitcoin savings, she says. She still has almost $2,000 in the account.

At the Point Break Café, owner Enzo Rubio says his strategy with all the Bitcoin payments that come in is to treat them as a savings account he doesn’t plan to touch. The first order he accepted in Bitcoin was worth $10 back in November.

When I was there, that value went up to $30, and it’s now just above $22. He’s ridden these bouts of volatility by paying close attention to Bitcoin’s moving average, he says, already describing his strategy in crypto parlance: he’s HODL, Bitcoiner language for “buy and hold.”

El Zonte is among the longest-running experiments of its kind, but it’s still largely untested. “I’d be very interested in seeing what happens if we enter a bear market,” says McCormack, the British podcaster. “If you’re a shop owner and you have $50 a day in Bitcoin sales and all the sudden that goes up to $60, that’s cool. But what happens when it starts going down to $40 or $30?”

On May 12, Elon Musk tweeted that Tesla Inc. wouldn’t take payment in Bitcoin over concerns about the environmental impact of mining the digital currency, which ignited a Bitcoin selloff. His tweet came as a surprise, given that just a few months earlier he said the carmaker would take Bitcoin, which sent the price soaring.

The price eventually touched a low of $30,000, causing a commotion, to put it mildly. It has since rebounded to around $40,000 as of June 14—this time prompted by Musk changing course once again.

Volatility is only one of many risks Bitcoin poses to a place like Bitcoin Beach, and, soon, the rest of El Salvador. After Bukele’s June 5 announcement about turning it into legal tender, the 39-year-old went on Twitter Spaces to explain how El Zonte influenced his decision: “You guys demonstrated that a community can actually benefit from Bitcoin.

Now we’re going to demonstrate it on a countrywide scale.” Two days after El Salvador passed a bill adopting it as a parallel currency, the International Monetary Fund was already pushing back, warning, “crypto assets can pose significant risks.”

Since the bill passed, Peterson says he’s been inundated with requests by banks, phone companies, and other businesses all asking for information about the project and Bitcoin in general. Downloads of Bitcoin Beach and Strike are now among the top three finance iPhone apps in El Salvador, and the number of transactions on the Bitcoin Beach app grew tenfold, to about 8,000 a day, Peterson says.

Peterson’s plans have changed, too. He was eventually going to wind down the amount of Bitcoin he was sending to some small-scale projects—$5,000 for a lifeguard training program, $1,000 a month for a student scholarship program—letting the government take over some and seeing if others can operate on their own. Now he sees himself helping roll out the model to towns across the country.

The idea is to help them build up capacity using a locally controlled version of the Bitcoin Beach model—kind of an online community Bitcoin bank. “There’s been a crazy amount of interest in Bitcoin these last few days,” Peterson says by phone, a few days after the bill was passed.

“We want to help build up capacity, bring in Bitcoin jobs to El Salvador. That’s really been our goal all along.” Of course, the more the experiment grows, the less controlled it becomes.

Residents have experienced their share of panic, especially during the first dips in price, says Peterson, who’s tried to reassure them by explaining the ups and downs of the market. His team is preparing residents for an extended down cycle by moving some holdings into U.S. dollars or making large purchases now, while prices are high.

Some locals are already a few beats ahead. An hour after sunrise on my last day in El Zonte, I walk to the beach entrance next to a community skate park. About a dozen surfers have paddled out to the break point to catch decent-size waves.

Hugo Conteras, a shirtless twentysomething, stands on the shore with a long lens, photographing them. Later, he offers to sell them a series of the best shots for about $20. He tells me surfers sometimes ask if he’ll take Bitcoin. He’s taken it on a few occasions, but the dips in price burned him.

“Now I tell them it’s $25 if they want to pay in Bitcoin,” he tells me. “You don’t know when it’s going to go down.”

Updated: 6-22-2021

Strike Is Phasing Out USDT From Bitcoin-Based El Salvador Remittances, CEO Says

“Tether is no longer a part of anything,” Jack Mallers said on the “What Bitcoin Did” podcast.

Strike, the startup building a bitcoin-based payment system in El Salvador, is phasing out its use of Tether’s USDT stablecoin as a U.S. dollar substitute, CEO Jack Mallers said.

“Tether is no longer a part of anything,” Mallers said on an episode of the “What Bitcoin Did” podcast released last week. “Tether was part of the plan originally because it had to be, because I didn’t have a choice.”

Mallers’ remarks – which come less than a month after he introduced El Salvador President Nayib Bukele to the Bitcoin community at a Miami conference – may come as a relief to those concerned about USDT’s backing.

Tether, issuer of USDT, settled a New York State Attorney General probe into its finances in February. Last month, the company disclosed that nearly half of the collateral backing its token is commercial paper, without specifying the issuers or ratings of those debts, leaving the market guessing how creditworthy and liquid the assets were.

Prompting further skepticism, with more than $60 billion of USDT outstanding the breakdown would mean Tether has a $30 billion commercial paper portfolio – bigger than Google’s or Apple’s. According to the company, only 4% of Tether’s reserves are cash and 3% U.S. Treasury bills.

But when Mallers arrived in El Salvador several months ago, his options for building a faster, cheaper remittance system on top of Bitcoin’s Lightning Network were limited, he told podcast host Pete McCormack. (The relevant portion starts at around 23:00 here and ends at 27:00.) This was before Mallers met Bukele, who made international headlines this month when his country became the first to make bitcoin legal tender (alongside the dollar, which has been El Salvador’s currency since 2001).

Updated: 6-25-2021

El Salvador To Airdrop $30 In Bitcoin To Every Adult Citizen

Every Salvadoran adult who downloads the government’s Bitcoin wallet app will be eligible for an airdrop of $30 worth of BTC.

The president of El Salvador has announced the government will airdrop $30 worth of Bitcoin (BTC) to every adult citizen of the country.

The announcement was welcomed by Bitcoiners, with influencers speculating that El Salvador’s government will need to purchase the required BTC it intends to distribute adding more than $100 million in buying pressure on markets.

Quickly googled estimates of the adult population of El Salvador varied, with on-chain analyst Willy Woo tweeting that Bitcoin’s global user base will grow by 2.5% thanks to the influx of 4.5 million Salvadorans.

Others placed the Salvadoran adult population as high as 6.5 million (which is actually the total population), with Yahoo Finance anchor Zack Guzman using the figure for some rough, back-of-the-envelope calculations, suggesting that $195 million worth of Bitcoin will be airdropped across the country.

Exact figures are hard to find, but Statista shows that in 2019, the population aged 15 and above was 4.72 million.

However, Crypto Twitter’s euphoria may be be slightly premature, as local publication Prensa Latina notes El Salvador’s citizens will only receive the free Bitcoin after downloading the government-issued cryptocurrency wallet application.

The news was announced during a Friday press conference, with president Nayib Bukele stating the government’s “wallet app will even work anywhere with a cell connection, and you won’t have to have a cell plan for the app.”

President Bukele also stated that the country’s much-celebrated Bitcoin law recognizing BTC as legal currency nationwide will come into effect on Sept. 7.

El Salvador’s Bitcoin law was passed roughly two weeks ago. While the move has been praised by the global crypto community, the legislation has faced opposition from a minority political party and the World Bank.

Athena Confirms Plans To Bring 1500 Bitcoin ATMs To El Salvador

Accessing BTC is about to get a lot easier in El Salvador with the crypto ATM rollout.

U.S. company Athena intends to supply El Salvador’s new crypto-based economy with 1500 Bitcoin ATMs, a company representative has confirmed.

The rollout will start small, trialing a few dozen machines to establish a business model. The Chicago headquartered firm plans to invest more than $1 million to install cryptocurrency ATMs, targeting regions where residents receive remittances from abroad.

Along with installing the new machines it will also hire staff and open an office to carry out operations in El Salvador.

Athena currently operates just two ATMs of this type in El Salvador, one at El Zonte beach as part of an experiment called “Bitcoin Beach” aimed at making the town one of the world’s first crypto economies, and the other in El Tunco, according to CNN.

Athena’s director for Latin America, Matias Goldenhörn, told Reuters that Salvadorian President Nayib Bukele had “presented us with a tough challenge of 1,500 ATMs, we will go for that, but in phases. We are a private company and we want to ensure that our development in the country is sustainable.”

On June 17, Athena posted about its plans to expand in the country in the wake of lawmakers passing a bill to make Bitcoin legal tender. The company tagged President Bukele asking if a thousand machines would be enough. He responded he had set his target on a larger figure.

1,000? How about 1,500?#BTC♻️ https://t.co/PDApT7M7T5

— Nayib Bukele (@nayibbukele) June 16, 2021

Goldenhörn stated that the business model is likely to be different from that in the U.S., which currently has a total of 19,325 BTC ATMs according to Coinatmradar.

“Initially we are going to bring dozens of machines, (we’ll) test what the business model is like in El Salvador, which will probably be different than in the United States,”

El Salvador’s Bitcoin adoption plan has already experienced pushback from the World Bank, which refused to assist the country in its transition, citing “the environmental and transparency shortcomings” associated with the digital asset.

On June 22, Cointelegraph reported that an opposing political party filed a lawsuit alleging the new Bitcoin law could be unconstitutional and harmful to the country.

El Salvador’s Bitcoin Fee Problem (And Solutions)

Bitcoin fees would make the cryptocurrency mostly unusable for Salvadorans. Here’s how the first country to adopt BTC plans to tackle the fee problem.

There were two big pieces of news yesterday out of El Salvador, which – let’s all say it again – will become the first country in the world to treat bitcoin as legal tender. First, the South American country set a Sept. 7 date for the activation of its new currency. In the course of the announcement, President Nayib Bukele clarified that “the use of bitcoin will be optional,” which may reassure those concerned about any coercive elements of the law.

Even more interesting was the announcement early this morning that El Salvador will be distributing about $30 worth of bitcoin to any citizen who activates a new state-backed crypto wallet called Chivo. It’s a serious incentive in a country where per-capita income is about $4,000 per year.

But the amount might invite skepticism if you’ve been paying attention to bitcoin metrics in recent months. In April, the average fee for a single bitcoin transaction peaked at just short of $63. Fees were at or near $30 for two weeks in late April, during which time $30 in a bitcoin wallet would have been prohibitively slow or expensive to use for anything.

On-chain fees have since dropped in dollar terms to under $7 – manageable, though still historically high. Bitcoin fees fluctuate because they’re effectively set by a bidding process for block space. During periods of high price volatility like April, speculators who need to move coins fast can bid prices way up.

Even in more stable times, on-chain BTC average fees range from 50 cents up to $2 to send any amount of money, which is very affordable relative to fees from global remittance providers like Western Union, but still too much for smaller, day-to-day payments in a poor country. (Credit card fees in the U.S. are roughly 2%, which, to be clear, is itself pretty nuts.)

On-chain transaction fees have often been leveraged as a critique of bitcoin. At the systemic level, of course, that’s absurd, as fees are based on competitive bids. Saying “bitcoin fees are too high, look how much people are paying!” is the logical equivalent of Yogi Berra’s famous quip about a popular New York restaurant: “Nobody ever goes there anymore – it’s too crowded.”

That said, fee competition between low-income and high-income users seems like a real issue. Luckily, users in El Salvador will have two mitigating options.

Most importantly, El Salvador’s bitcoin development partner, Jack Mallers’ Strike, offers low-fee bitcoin payments through the Lightning Network.

Lightning is a “layer two” solution, built on top of and settling to the Bitcoin blockchain, but offering BTC transactions costing just fractions of a cent. For bitcoin to work as a day-to-day payments tool, Lightning, or something like it, is a necessity.

Remittances are a slightly different story. One of the interesting and lesser-known features of the Bitcoin network is that you can choose your payment fee based on how fast you’d like a transaction settled: high-fee transactions are picked up first, but lower fee offers usually get into a block within a few hours. So for remittances, which can sometimes be less urgent than retail payments, that’s a second option.

This does raise a bunch of new questions about the El Salvador program, particularly from an educational perspective. Users in the country will have to make a new set of fairly complicated decisions about how to transact, and they deserve to have the options laid out clearly. You can be sure CoinDesk will be watching Strike and El Salvador’s progress closely.

Updated: 6-28-2021

El Salvador Wants To Attract Bitcoin Talent. Its Strategy Is Working

El Salvador is becoming a proving ground for Bitcoin’s biggest ideas.

“I really see El Salvador as being the Switzerland of Latin America, if this experiment goes successfully,” Ray Youssef, CEO of peer-to-peer crypto exchange Paxful, said over Zoom.

On Sept. 7, El Salvador will become the first country in the world to adopt bitcoin (BTC, +1.04%) as legal tender. That could open a new age for the struggling Latin American economy, President Nayib Bukele, the prime mover behind the so-called “bitcoin law,” said. It also opens a new frontier for bitcoiners looking to test their economic and social theories.

Bitcoin will not just be a companion currency to the U.S. dollar, but a cornerstone of the nation’s efforts to modernize and digitize its economy. Bukele wants El Salvador to become a bitcoin mining hub – potentially tapping into its rich geothermal resources – as well as a center for blockchain software development and a paradise for the crypto rich.

“Why create this law? Because bitcoin has a $600 billion market capitalization globally, and if we do this, investors and tourists who own bitcoin will come to the country and benefit Salvadorans and the economy,” Bukele said at a national address on Thursday.

He’s making an attractive offer for outsiders and citizens alike by eliminating a capital gains tax on the cryptocurrency and building a state-backed wallet, which will come pre-loaded with $30 worth of BTC for adult citizens. The plan is a “leap forward for humanity,” not just Bitcoin, he told Peter McCormack when the podcaster traveled to El Salvador recently.

Although the nation’s plans are still being drafted, a series of interviews with Bitcoin startups and founders suggest that bitcoiners are ready to invest their time and money to help El Salvador (population 6.5 million) establish the first bitcoin standard.

Youssef, an evangelist for bitcoin in the developing world, is one of a growing number of crypto entrepreneurs who have made their way to the country looking for opportunities to expand their businesses and assist the government in setting up a parallel monetary system.

Blockstream, a Bitcoin infrastructure company, is one of the most ambitious in this pursuit. On June 5, it pledged provisions to connect El Salvador with its Blockstream Satellite program, a way to synchronize with the Bitcoin network during times of internet outages or shutdowns, and it announced plans to open bitcoin mining facilities.

Samson Mow, chief strategy officer at Blockstream, told CoinDesk the company has shipped two satellite kits to the country and said “early-stage” but “high-level” conversations are happening around “volcano mining” (or mining powered geothermal power).

It doesn’t end there. Mow said Blockstream Financial, a new corporate division, is working to structure “a few potential bond offerings” on the Liquid network, a bitcoin scaling system backed by Blockstream.

That project is also in its infancy, and details of what may be the first state-backed, blockchain-based securities offerings are scant. One particular: The bonds might be floated to finance the state’s mining operations, which would tap into currently stranded geothermal energy, Mow said. Volcano mining is capital intensive.

“The bond offerings we’re proposing will be a critical component of the bitcoin development of El Salvador,” Mow said. “It seems like they can get this done quickly.”

This is a key theme in the story so far: El Salvador is ripe with potential. It has a motivated government (which passed the bitcoin bill with a supermajority) and the support of the global bitcoin community, though some of these ideas appear founded on shaky ground.

The bitcoin bill is an experiment that could go terribly wrong, economists and media pundits have warned. In a report, Fitch Ratings said the country’s plans would increase regulatory risks for financial institutions. The International Monetary Fund and World Bank have also voiced disapproval.

Volcano mining, crypto in space and the widespread use of the Bitcoin Lightning network sound like science fiction. But those efforts are real and “hyperbitcoinization” is a real goal. The El Salvador experiment, Mow said, will serve as a blueprint for the world.

“El Salvador is a key point in that battle. If they can succeed, it paves the way for much broader bitcoin adoption in the world,” he said. And for “making things like the IMF and the World Bank obsolete.”

Payments

Youssef went to El Salvador as part of an “official delegation of Bitcoin ambassadors,” organized by Brock Pierce, a former child movie star and a co-founder of Block.oone, a blockchain software company. Youssef spent only a few hours with that delegation, shaking hands and speaking with government officials, but said Bukele’s cabinet is of a “younger, progressive” breed, hyper-focused on the goal of “bitcoinization.”

Youssef spent the majority of his two-day stay in El Salvador at Bitcoin Beach, a small coastal community that has experimented with bitcoin payments. (Bukele pointed to the privately funded project as a microcosm for what bitcoin adoption across the nation could look like.)

It was there that Youssef made his first Lightning transaction in the country. While bitcoin has largely functioned as a speculative store of value in wealthier nations, he thinks the path to “mass adoption” is paved through peer-to-peer payments. It’s also where his business opportunity lies, albeit indirectly.

“The first challenge is getting bitcoin into the country and that’s something that we did in Africa,” he said, referring to Paxful’s footprint in countries like Nigeria and Kenya. Consumers typically pay more per satoshi using a P2P exchange, because they are often buying from a small pool of sellers, but fees are often lower and it’s a quicker way to take direct possession of your coins. (On the day I spoke with Youssef, for instance, there was a $10,000 premium on BTC in El Salvador.)

Paxful already has an active market in El Salvador, but Youssef says he’s looking at the country as a potential base for further expansions in the region. His company has hired an associate of growth for South America and is searching real estate for an office. Paxful has about 450 employees globally, Youssef said.

“All I want to do is build the kind of street team that can go around beyond Bitcoin Beach to the capitol city, to the malls, to universities, and just educate people face-to-face about what Bitcoin is,” Youssef said. In particular, he is interested in teaching people about using BTC as an actual currency. “That’s the narrative we find truly drives adoption,” he said.

Swan Bitcoin, a bitcoin exchange, has a similar plan. The company is looking to rent or buy a “Swan House” in El Zonte to serve as a base for its marketing efforts in the region. CEO Cory Klippsten sees that as a place for bitcoiner friends to stay and work when traveling to El Salvador and a chance to “create great content … and educate the world about bitcoin by being on the ground.”

There isn’t a direct way to monetize the effort. Swan makes its money from selling bitcoin to “people with a lot of fiat,” Klippsten said, but it’s a price worth paying to spread the word of Bitcoin. “It looks like altruistic education, and it is, but that’s our marketing,” he said

Like Youssef, Klippsten envisions a world where bitcoin will make the transition from being primarily a store of value into a widely used, global currency. Education paves the way to that reality, which eventually means more people buying bitcoin on Paxful and Swan.

Home Grown?

Before Bukele came on the scene, El Salvador was not the first place people would associate with Bitcoin. Remittances, which make up more than a quarter of the nation’s economy, were rarely sent in the cryptocurrency. And while Bitcoin Beach was proving to be a successful experiment, the crypto economy in the country was still small.

Matias Goldenhorn, director for Latin America at U.S.-based Athena Bitcoin, a crypto ATM company that operated some of El Salvador’s only crypto ATMs, told CoinDesk the company decided to pursue countries south of the border to take bitcoin “to the people who need it the most.”

The company recently received a $1 million investment to expand its fleet of ATMs from two to 1,500 in the country. That would make El Salvador one of the most saturated markets for crypto ATMs.

Mexico-based Bitso, one of the largest cryptocurrency exchanges in Latin America, is also apparently looking to expand its operations. The company declined an interview, but offered this statement:

“We have made a commitment to work with the people of El Salvador on supporting and building the vision of Bitcoin for the country and are looking forward to being part of this evolution. We believe Bitcoin can in El Salvador and Latin America have a positive impact on the lives of millions, and recognize that there are many more beneficial Bitcoin developments to come.”

“I don’t want to pretend to be too altruistic,” Justin Newton, CEO of software security firm Netki, said. “What we do is we provide KYC and AML tools, right? We help customers with know-your-customer, anti-money laundering. If they’re successful down there, it creates a great market for us.”

Newton, another one of Brock Pierce’s delegates, was in and out of the country for a single day of meetings. His firm, which was founded in 2014, provides compliance tools for companies. About 70% of its clients are in crypto, and almost of those are private companies. He didn’t go to El Salvador with a plan to court the government or any one business in particular.

“If I go down there and I can help them be successful, it creates the environment that allows my company to be successful,” he said.

Updated: 6-30-2021

Salvadorans Will Not Be Forced To Use The Government’s Bitcoin Wallet

The government’s new “Chivo” Bitcoin wallet will be interoperable and commission-free.

The latest announcement from El Salvador’s pro-Bitcoin president, Nayib Bukele, has clarified that citizens will not be forced to use the government-issued “Chivo” Bitcoin wallet.

In a tweet on June 29, El Salvador’s President Bukele stated he wanted to clear up any misinformation regarding the government’s wallet application following the passing of the country’s Bitcoin law on June 9, which will take effect on September 7.

The new Bitcoin wallet is called Chivo, which is slang for “cool” in El Salvador, and it can hold both Bitcoin and U.S. dollars. Bukele stated it is just one of many crypto wallets that can be used, emphasizing its interoperability with other wallet apps.

Aclarando la desinformación que están tratando de esparcir acerca de la #LeyBitcoin:

1. La wallet del Gobierno solo es una de tantas wallets que se pueden usar.

2. La @chivowallet será totalmente compatible con otras wallets.

Sigue…

— Nayib Bukele (@nayibbukele) June 28, 2021

To allay privacy concerns, he added that the personal information requested by the wallet is already possessed by the government, emphasizing any requests for personal data within the app are for security purposes.

Bukele also highlighted that the Chivo wallet will not incur fees or commissions for transfers, noting that, unlike traditional crypto exchanges, it will not take a cut for converting BTC to USD and vice versa, and unlike credit cards, there will be no commissions charged to merchants or users.

Bukele stated that any money that is held or received in USD or BTC in the Chivo wallet will be able to be withdrawn into USD cash at any time at once the government has completed its roll-out of 200 new physical Bitcoin ATM branches, dubbed “Chivo Points” or “Chivo ATMs.”

The president also clarified that the $30 government BTC handout announced on June 25 would not be convertible into USD, emphasizing the administration’s intention to encourage the use of Bitcoin and the Chivo wallet.

The new digital wallet initiative could revolutionize monetary policy in the Central American nation. Roughly 70% of the population in El Salvador does not have access to bank accounts or any financial services, according to a Nasdaq report.

Updated: 7-2-2021

What Is Really Behind El Salvador’s ‘Bitcoin Law’? Experts Answer

1. Introduction

Last month, Salvadoran President Nayib Bukele’s “Bitcoin Law” was passed by El Salvador’s Legislative Assembly, giving the world’s first cryptocurrency the status of legal tender — something that is indeed a historic milestone for Bitcoin (BTC). The news was appreciated by the crypto community, and the flagship cryptocurrency surged 11.98% to $37,573 after the announcement.

President Bukele chose the perfect time and place to announce it: during the Bitcoin 2021 conference in Miami. It’s hard to imagine a more grateful audience of crypto supporters and advocates to be the audience for such an announcement.

As Marc Powers, a law professor and former United States Securities and Exchange Commission attorney, described it in his latest opinion article: “The showstopper was […] the young president of the Republic of El Salvador, Nayib Bukele, who hails from the most densely populated country in Central America.

[…] At the conference, Bukele announced that the country would adopt Bitcoin as a second native fiat currency, on par with the U.S. dollar.” And here’s how President Bukele described his intentions:

“In the short term this will generate jobs and help provide financial inclusion to thousands outside the formal economy.”

And while some argue that the Salvadoran experiment might be a bottleneck for Bitcoin, this law could be a solution to provide financial services to the nation’s people, considering about 70% of the population is unbanked. Meanwhile, the new law in El Salvador is about to forcibly onboard everyone, as it states:

“Every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service.”

The important question is: Will the mandatory transfer to crypto work? It has been said many times already that mass adoption of cryptocurrency is possible, but only through educating people so that they can gain a better understanding of crypto. Will President Bukele educate people on how to use crypto?

Additionally, one-third of the population in El Salvador lacks access to the internet, which would make it impossible for them to access Bitcoin and crypto services. How is President Bukele going to solve this problem in order to “provide financial inclusion” as he promised?

Also — and crucially important — a transition toward crypto should be a free-will choice made by the people themselves and not a forced decision made by a president. That notion is a core value of all cryptocurrencies — an aspect of their decentralized nature. But the highly centralized nature of President Bukele’s actions seems quite logical, given that he has been said to be on a path toward becoming “Latin America’s first millennial dictator.”

In a country that is accused of having some serious problems with human rights — with Human Rights Watch reporting that “Girls and women accused of having abortions have been imprisoned for homicide and aggravated homicide” and that “LGBT individuals face discrimination and violence with no effective state protection” — this sort of “progressive” legislation raises an important question: Was it really done for the benefit of Salvadorans?

From the financial perspective, adopting Bitcoin as legal tender also poses significant legal and financial ramifications. The big question that must be raised here is whether this decision will result in the recognition of Bitcoin as a foreign currency. If so, will Bitcoin transactions be subject to a financial transactions tax?

And since the vast majority of jurisdictions do not classify Bitcoin as a currency, but as an asset, the answer seems clear. Also, the World Bank already refused to support El Salvador’s request for help in the transition to using Bitcoin as legal tender.

Regardless, El Salvador’s decision is indeed a historic event for the crypto industry. To find out what crypto and blockchain industry representatives think about President Bukele’s “Bitcoin Law,” Cointelegraph reached out to a number of them to ask for their opinions on the following question: What, in your opinion, is behind El Salvador’s decision to give Bitcoin the status of legal tender, and how it will affect the space?

2. Alberto Echegaray Guevara, Aka “Cayman,” Artist And Entrepreneur:

“The vast majority of Salvadoran migrants, almost 2 million, work in the United States. Nearly one out of three Salvadorans send money home. Remittances account for 23% of El Salvador’s gross domestic product and benefit about 360,000 households, in the poorest areas of the country.

El Salvador’s official currency is the U.S. dollar. President Bukele’s Bitcoin Law is not only trying to make international money transfers cheaper and easier for 70% of his unbanked population, but also is trying to create a new economic hub and a new remittances platform in Central America. Bukele, as a smart politician, will capitalize on the impact of lowering the cost to near zero for $6.5 billion in remittances.

In my experience, after working 10 years in multilateral organizations in Washington, DC and being a representative at the FATF, I recommend that President Bukele strengthen his law with the support of an international financial integrity team. His social impact policy and strategy will need the support of a strong international network of financial intelligence units and key players in the international development arena.

Bukele has the unique opportunity to change the game of the global remittances business by having a proof of concept in one of the most important regions for money transfer, and using Bitcoin for the first time in history.”

3. Alexander Blum, Managing Director Of Two Prime:

“El Salvador’s adoption of Bitcoin as legal tender by law offers the country some optionality in financial matters and sovereignty. Having recently dollarized the country, El Salvador is threatened by large loans and external controls of the country’s decision-making ability. This, in tandem with the national government voting against some of the president’s proposed spending, has limited Bukele’s ability to push through many of the reforms and modernizing proposals he wishes to enact.

Introducing Bitcoin as legal tender allows El Salvador to benefit from generating income through mining, attracting outside investment and interest from the crypto community, and reducing the cost of remittance for its citizens.

The optionality with Bitcoin also provides some competitive alternative to U.S.-dollar loans and financial resources, at least providing the country with a stronger negotiating position.

The success of this initiative will largely rely on its execution. The ability to enforce the acceptance of Bitcoin or benefit from remittances in a country with minimal internet and communications infrastructure and the ability to mine Bitcoin profitably will have a large bearing on the success of Bukele’s efforts.”

4. Amber Ghaddar, Сo-Founder Of AllianceBlock:

“I am still of the opinion that Bitcoin is a great alternative asset that has its place in an alternative portfolio allocation. However, Bitcoin lacks the characteristics of a currency in terms of providing stability to a financial system. Its high volatility and lack of recourse make it currently a less viable alternative to central bank currencies — particularly in developed economies.

Additionally, if you expect Bitcoin prices to go up in the future, it makes little sense to use your Bitcoin to pay for daily goods and services. 45% of the total Bitcoin circulating supply is hodled and has not moved in the past two years. Therefore, the velocity of Bitcoin vs. fiat money is much lower, making it akin to an investment medium rather than a payment medium.

There is no doubt that this is a bold move by El Salvador that could pave the way for smaller developing market economies to find new revenue streams through Bitcoin mining. Alternatively, it could lead to an increase in financial instability and have dire consequences in terms of inflation and access to capital. The world should definitely keep an eye on El Salvador. I know I am.”

5. Cristina Dolan, Founder And CEO of InsideChains, Vice-Chair Of MIT Enterprise Forum:

“The brilliant timing of the enthusiastic announcement by El Salvador’s president, Nayib Bukele, during the well-attended Bitcoin Conference in Miami in June generated an optimal amount of buzz. Announcing that El Salvador would be the world’s first sovereign nation to adopt Bitcoin as legal tender to the largest possible audience of crypto enthusiasts is the best way to attract entrepreneurs and investors to its crypto-friendly shores.

Building out the networked infrastructure to support the announcement will require a sophisticated secure architecture, investment and talent. Managing the distribution of the $30 in Bitcoin to each adult will require more than simply educating the public on the use of the official digital wallet, ‘Chivo.’

Significant resources will be required to manage the cybersecurity to protect the Bitcoin accounts, integrate the traditional financial infrastructure and implement proper global regulatory Anti-Money Laundering, Know Your Customer and Travel Rule capabilities.

Another brilliant facet of the public relations plan is the $30 in Bitcoin, which provides consumers with the economic motivation to figure out how to set up their accounts and transact, which will create the required momentum to gain adoption among the unbanked citizens as well.

While the PR was brilliantly timed and executed, the country has many complex issues that will create challenges in attracting the required resources and global engagement required for success.”

6. Da Hongfei, Founder Of Neo, Founder And CEO Of Onchain:

“Freedom from U.S. domination is always a popular theme in Latin American politics. Due to its fragile financial systems, El Salvador — and many other Latin American countries — has no choice but to depend on the U.S. dollar.

By embracing Bitcoin, this time Bukele has put El Salvador in a global spotlight while also positioning himself as a pioneer by becoming the first president to make Bitcoin a legal tender.

In terms of impact, I believe it will be mixed and limited in the short term. While Article 7 of the Bitcoin Law requires all businesses to accept Bitcoin payments, people may remain reluctant to accept Bitcoin due to price volatility and low awareness of Bitcoin; in fact, I believe many will choose to immediately exchange Bitcoin for U.S. dollars.

Internet access in El Salvador is also limited, and many do not own smartphones, making me believe Bitcoin will not be widely adopted.

However, this law may attract more investment into technology by prompting crypto entrepreneurs to invest in and move to El Salvador. Moreover, it may help El Salvador establish a blockchain-based financial infrastructure. Given that 70% of the people do not own a bank account, it is possible that many will choose to own a digital wallet that allows for more free transfers of money than a traditional bank account.

Globally, this law is certainly a great boost for the crypto community, though some believe that Bitcoin should remain ‘money without a government,’ in that it does not need the legitimization of nation-states.

More importantly, it may affect how governments approach Bitcoin. If Bitcoin is recognized as a currency rather than a virtual commodity, some governments may feel more threatened and respond with stronger regulations, while others may accelerate the development of their own central bank digital currencies to avoid being subverted by a ‘digital nation-stateless currency.’

However, countries that are dissatisfied with the dollar standard may move to legitimize Bitcoin, thus building the narrative of Bitcoin as a financial equalizer. It is very possible that developing countries may embrace Bitcoin first, thus triggering a migration of talent, hashing power and social influence from developed to developing nations.

The Bitcoin Law is a massive social experiment that will ultimately test Bitcoin’s ability to challenge the dollar system while also exploring complicated political and economic waters.”

7. Denelle Dixon, CEO And Executive Director Of Stellar Development Foundation:

“During the health crisis, practical activities like standing in line for paychecks or remittances have raised important questions around the fairness of who has access to digital finance and who does not. The world’s existing financial system was made for the few and not the many, and blockchain can change that.

President Bukele has said that the implementation of digital currencies will ease the process for Salvadorans working outside the country to send money home. And in a broader sense, this move helps highlight the promise of blockchain technology as a more affordable, efficient medium of international exchange.

Recently, the international community has supported reducing remittance costs to end-customers; however, they still average 6%, according to the World Bank Group. Notably, in Latin America, remittances represent 15% of income for those at the base of the economic pyramid.

At the Stellar Development Foundation, we are focused on the use of digital currencies that are interoperable and extend traditional banking rails to ultimately deliver more equitable access to the global financial system.

We are encouraged to see El Salvador’s collaborative dialogue with international organizations. Our hope is that it enables a consumer-centric approach toward safe pathways for the expanded use of digital currencies across Latin America.”

8. Eli Taranto, Chief Business Development Officer At EQIBank:

“El Salvador is a country that has been plagued by corruption. After the end of its civil war in 1992, the country was mostly ruled by rival political parties, then gangs aligned with either the right or the left. This left the economy in shatters, where the largest source of income and foreign currency is still remittances from Salvadorans living abroad.

Nayib Bukele seems to be a clean break from El Salvador’s turbulent past, looking to give his country a fresh start. He is not aligned with any political party and he is a millennial, the son of a Palestinian imam, and married to a woman of Jewish descent — his unique background and family history are a testament to his independent, contemporary views.

Based on his recent interviews, the reasons seem clear enough: He understands that in many respects, Bitcoin is a lifeline in the post-COVID-19 reality for a country depending on remittances and the U.S. dollar. Transfers that cost almost nothing with Bitcoin would hugely benefit the ailing economy, especially considering that 70% of El Salvador is still unbanked.

Perhaps more importantly, due to its very nature, Bitcoin will protect the country from U.S. dollar inflation that’s bound to hit El Salvador in the very near term — a smart move that is likely to establish El Salvador as a major destination on the digital asset circuit, since BTC will not only become legal tender but also easy to mine, as El Salvador’s volcanoes offer an ideal and renewable thermal power source.”

9. Eloisa Marchesoni, Fixed-Income Crypto Investor:

“Bukele is a right-wing populist, but this was not an internal move to appeal to his base, since there has been no official messaging at all. Anyone can use cryptocurrencies in El Salvador. However, giving it the backing of the law, one can use it in any transaction inside the country’s territory — but that currency is already used around the world.

So, Where Is The Big News?

Unless… it’s to launder money freely within El Salvador. Organized crime, of course, loves its Bitcoin — the only problem is cashing out, but that’s easy if BTC is an official currency. Bukele has repeatedly denied links to local drug cartels, despite evidence of his past work with them to assist his political party.

Balaji Srinivasan has already proposed paying off small countries to pump Bitcoin with this sort of announcement. This may be how the El Salvador deal happened. Bukele also did it for the hype on the news, igniting the same FOMO in other emerging countries that China ignited in the United States with the digital yuan news.

It is no wonder that Jaime Guevara, the deputy leader of the Farabundo Marti National Liberation Front (FMNL), has filed a lawsuit against the Bitcoin legislation, joining forces with a group of locals that feel like such a law is to loot people’s pockets and force them to trade.”

10. Giacomo Arcaro, Professor At College Des Ingenieurs And Tag Talent Garden, Founder Of Black Marketing Guru:

“I do personally believe that this is just an extraordinary global marketing operation for Nayib Bukele to appear like a financial savior in front of his nation. This whole thing may lead to:

Narcotraffic money laundering by using El Salvador’s banks as an OTC desk Crypto tax haven for all the Bitcoin millionaires from all over the world.

Let’s imagine a narcotrafficker with $1 million cash in El Salvador. All they have to do is just convert their stack into crypto via OTC by using online anonymous services and after that open a bank account, transferring legit BTC to a El Salvador’s bank as trading profit. This way, you can clean millions of dollars from all the non-legit businesses all around the world.

On the other hand, we have 130,000 crypto millionaires from Russia, China, the United States and Europe waiting for a country that gives them residency in exchange for a BTC deposit where they can avoid tax evasion crimes in their countries.

Bukele’s idea is good for him. What about the people?”

11. Jane Thomason, Co-Founder Of The British Blockchain & Frontier Technologies Association, CEO of Supernova Data:

“Certainly, this was a political moment of significance to the crypto community, who would see it as an important step in the road to the Holy Grail of mass adoption. However, for others in crypto, calling it ‘legal tender’ will undo a lot of hard work that has been done with regulators to classify crypto as a commodity. Indeed, it may attract more negative, unwelcome attention from U.S. regulators.

We have already seen people in struggling states like Venezuela, Lebanon, the Philippines and Zimbabwe using crypto remittances and using crypto as a store of value. The president has taken it one step further with his announcement that Bitcoin was legal tender. This has certainly attracted national and international attention. It may even have deflected attention from his many domestic woes for a short time.

However, I’m not sure it will help the poor people of El Salvador. Bitcoin was already legal, and many were already using Bitcoin for remittances. The mobile coverage is extensive, which means it was already accessible.

Exactly how making Bitcoin legal tender changes the underlying economic and social problems of the country is hard to see. It certainly won’t reduce discrimination and despotic tendencies. As to whether crypto businesses will flock to El Salvador and provide a much-needed economic boost, only time will tell… Was that a flying pig?”

12. Luke Stokes, Managing Director Of The Foundation For Interwallet Operability:

“Bitcoiners don’t like governments. Many in the Bitcoin space (myself included) have been labeled anarchists (which means ‘without rulers’) due to our desire to remove centralized rulers from controlling money.

Having attended the recent delegation to El Salvador led by Brock Pierce and meeting face to face with government representatives there, I’ve had to rethink the role that a government can play as the world transitions to a blockchain future.

The officials we met acted more like entrepreneurs on a mission to accomplish their goals of making their Bitcoin Law an everyday reality for their country, leading to financial inclusion the world has never seen. Many other nations are watching, and I believe El Salvador will set the bar on how to prepare for and transition to the future of decentralized, self-sovereign money.”

13. Napoleón E. Cornejo, Computer Engineer, Technology Specialist, Founder Of GeoKapti:

“It is important to understand the context in which the Bitcoin Law comes about. Since the start of his administration, it has been a goal of the president to undermine democratic institutions in El Salvador to centralize power.

Worldwide news outlets have documented, for example, his siege of the parliament with the military in 2020, the unconstitutional ousting of the Supreme Court magistrates and the attorney general by his recent parliamentary majority, hampering the Institute for Access to Public Information, and the notorious lack of transparency.

Therefore a swift, extreme, radical measure of this sort can only happen in countries where there are no democratic checks and balances: A president surprises the nation, making the announcement at an international conference, and the next week, within three hours, the parliament approves it with no debate. In other words, this law is not a measure of vision or modernization. On the contrary, it’s a sign of a severely eroded democracy.

From a purely economic perspective, the law is unnecessary. Bitcoin was already being used by some communities without the need of a law, much less one that has a mandate to use it as legal tender.

It is doubtful that this can scale countrywide in a population with low literacy (and even less technological literacy) and a struggling economy with a negative trade balance that would still require U.S. dollars to pay for imports.

It is, therefore, logical to assume that there are other reasons at play. The bad relationship with the United States and the expectation of sanctions seems a plausible explanation, as it may allow the bypassing of international financial controls. Media-savvy Bukele is also keen to build a superstar image of himself, and this law has pushed his persona onto the world stage.”

14. Pablo Gonzalez, Co-Founder Of Bitso:

“El Salvador’s move to adopt Bitcoin as legal tender is historic. It is rooted in hope for a better future. With 70% of Salvadorans lacking adequate access to basic financial services, and many heavily reliant on income from remittances, the adoption of Bitcoin in the country represents an opportunity for Salvadorans to realize the financial freedom they deserve.

In challenging the status quo, forward-looking Salvadorans have rallied to harness the power of this technology to increase financial inclusion and equity. We have made a commitment to work with the people of El Salvador on supporting and building the vision of Bitcoin for the country and are looking forward to being part of this evolution.

We believe Bitcoin can have a positive impact on the lives of millions, and we recognize that there are many more beneficial developments to come. We encourage the crypto community and our industry peers to rally in support of this game-changing opportunity. El Salvador, the region, and ultimately the world have much to gain from supporting and spreading this empowering technology.”

15. Rob Viglione, Co-Founder Of Horizen:

“While it’s unambiguously a boon to the industry that El Salvador has made Bitcoin legal tender, and other countries will undoubtedly follow suit, real adoption at a country level will require a good deal of nuance. For instance, exchange rate mismatch could wreak havoc if not properly thought through.

If debts contracted in Bitcoin must be paid in Bitcoin, independent of what happens to the price of Bitcoin relative to local currencies, you can easily see default risk skyrocketing. That said, thoughtful integration of Bitcoin and other digital assets into national economies would open the door for tremendous innovation and growth.

I share the broad industry sentiment about it being unambiguously good that countries are signaling support for crypto, but I can’t help but have a healthy skepticism for the particular news in El Salvador.

I have some sense for Central American politics and crypto adoption — which is basically nonexistent. Given historic instability in parts of the world, like Central America, it sure would make sense for everyday people and businesses to get into crypto as fast as they can, but the reality is that most aren’t even considering it.”

16. Rodrigo Borges, Managing Partner Of CB Associados:

“Bitcoin’s approval as legal tender by El Salvador is very positive for the market because, for the first time, a nation is adopting BTC as a new form of money.

Naturally, the characteristics of El Salvador’s economy facilitate its adoption, since the U.S. dollar is the official currency over there. Additionally, with a large number of expatriates, part of El Salvador’s economy depends on the remittances made by citizens abroad; therefore, adding Bitcoin as a legal tender facilitates the remittance of resources.

Currently, we have some uncertainty regarding the regulation of Bitcoin and other digital assets around the world. In this sense, entrepreneurs and institutional investors are seeking jurisdictions with positive regulation of digital assets.

Therefore, having a nation adopting Bitcoin as legal tender is a strong signal to the market that El Salvador might be open to discuss a positive regulation for other digital assets.

For the above mentioned, it seems to me that President Nayib Bukele’s interest in the ‘Bitcoin Law’ would be to facilitate the remittance of funds by expatriates and turn El Salvador into a ‘crypto oasis’ in the Americas, which might encourage digital asset companies to establish their business in El Salvador.”

17. Roger Ver, Executive Chairman Of Bitcoin.com:

“Since the requirements to sign up with Lightning Network in El Salvador with Strike are about the same as the requirements to open a bank account, I don’t see how this is going to do much to help the unbanked.

Another major problem with the law is that it forces people to accept Bitcoin as payment.

In a just world, people would be able to choose for themselves what forms of payment they want to accept.”

18. Shailee Adinolfi, Director Of Strategic Sales At ConsenSys:

“The Bitcoin Law shows that El Salvador is embracing a new asset class, and giving its people the green light in accessing it. The desire to use clean energy for mining is being applauded in the crypto ecosystem.

However, given the volatility of Bitcoin and Ether, people should be educated on the opportunities and challenges that these cryptocurrencies bring, and should understand the purpose and uses of stablecoins.

The lack of internet connectivity for so many in the country gives us another signal that there is an immediate need for more offline payment and safe storage solutions, linked to cryptocurrencies.”

19. Sheffield Clark, CEO of Coinsource:

“It was only a matter of time until a nation-state would announce making Bitcoin legal tender and a treasury reserve asset. El Salvador, using the U.S. dollar as its main currency, was a logical contender, as economies depending on the U.S. dollar are expected to be hit hardest if inflation continues to soar.

For El Salvador, it makes particular sense, as 70% of the population is unbanked, 22% of the country’s GDP is remittances and over 2 million Salvadorans are living in the U.S. alone. Crypto wallets are already today the de facto bank account replacement in emerging markets, as they also are in the United States.

Remittance fees can reach up to 50%, while Bitcoin-based solutions would bring the cost down significantly, particularly for the unbanked population. Reducing remittance fees could immediately drive GDP growth beyond 20% for El Salvador, with a strong signal for many other countries, as the U.S.–Latin America remittance corridor is the largest in the world.

This may not impact everyone in El Salvador directly, but we have seen in other parts of the world that the ability to transfer and store wealth in the form of Bitcoin has resulted in improved living standards of societies across many metrics. Bitcoin ATMs generally can provide instrumental support for both the on-ramp and off-ramp among the Latin American community in the United States.”

20. Shidan Gouran, Co-Founder Of Gulf Pearl:

“El Salvador is predominantly a service economy, and its major export is human labor to the United States. Thus, international remittances form a major inflow of money into the country. When you pair this with the fact that roughly 70% of the nation is bankless and a significant amount of the incoming money is taken by middlemen and money service providers at unreasonable rates, you can see why Bitcoin would be an attractive option for the nation.

Since El Salvador was already using a foreign currency, the U.S. dollar, as its legal tender, it did not have to worry about any loss of seigniorage or control. Rather, it now has a dual model where both the U.S. dollar and BTC are legal tender options available to its citizens.

Barring any subversive intervention by the West, I believe that in the relatively short run, the new law will have a very positive impact on El Salvador’s local economy, especially given that part of the legislation protects against Bitcoin’s volatility by providing all vendors guaranteed access to a spot market for converting their BTC to dollars at a click of a button.

On a global scale, El Salvador has already made a number of emerging countries explore incorporating Bitcoin as a tool in improving their financial systems.

Some disagree with my point of view on the short-term benefits of El Salvador’s Bitcoin initiative, citing that since a third of the population is without internet access, they will not benefit from Bitcoin as a solution for financial inclusion.

First, if you consider these statistics and also assume, in the worst case, that all those who don’t have internet access are unbanked, then El Salvador’s Bitcoin Law would be directly responsible for the financial inclusion of, at least, 37% of its population, or at least 2.3 million individuals who would have been previously unbanked.

Furthermore, it is a fallacy to think that you need full internet connectivity for each citizen in order to take advantage of the Bitcoin network based on the system that El Salvador has set up. You actually don’t. What you do need is a nationwide mobile communications network.

Virtually every Salvadoran, even in the most remote villages, has smartphones that are more than capable of running El Salvador’s official wallet app, and the 2G network connectivity that blankets the whole nation is actually all that the wallet requires in order to participate on the Bitcoin Lightning network.

It wouldn’t be impractical, in the very near term, for the government to enable the wallet functionality for virtually every citizen as a core service, in addition to voice and text communications as primary mobile services, if the desire was there.

In the longer run, I think legal tender currencies that are not under the control of any particular government will be a major leap forward in making the world a better place and a step closer to a democratic ideal.

My personal opinion is that Bitcoin currently has some inherent economic, environmental and technical flaws that make it a bad choice for an ultimate world currency. At the same time, as purely a societal construct, it can evolve to be the right system as the majority sees fit, and it will if it is to survive.”

21. Tatiana Revoredo, Co-Founder And Chief Strategy Officer Of The Global Strategy, Founding Member Of Oxford Blockchain Foundation:

“We have now moved out of the narrative stage of Bitcoin, where it’s enacted or adopted by a country as an asset on the balance sheet of the central bank, and we move to the next stage as legal tender.

And this impacts not only the economic aspect but several aspects, like a national and international human rights perspective — especially in El Salvador, where 70% of the country does not have a bank account but more than 50% of the country has access to the internet. So, there is a significant overlap of people whose lives are being changed as a result of this. And President Nayib Bukele knows this.

Most people don’t think Bitcoin is money, but with El Salvador’s new Bitcoin Law, and others to come, isn’t it really becoming money? It seems to me that the president of El Salvador is giving legal tender status to Bitcoin to fuel this change and transform the lives of the population for the better, and the advances in the Lightning Network enable this.

We are watching Bitcoin’s role as a fast, borderless payments vehicle become a reality. The socioeconomic impacts and the speed at which this will take place may surprise people.”

22. Vanessa Grellet, Head Of Portfolio Growth At CoinFund:

“President Nayib Bukele’s ‘Bitcoin Law’ is supported by the transparency and speed of Bitcoin’s decentralized transactions. As 70% of El Salvador’s population is unbanked, accepting Bitcoin as legal tender allows financial autonomy for the Salvadorans that previously did not trust, or have access to, traditional financial institutions.

However, the entire payment infrastructure of the merchants accepting digital currency will need to be adapted to this new form of payment before it’s effective, and Bitcoin’s volatility as an asset class poses risks for Salvadorans, unlike stablecoins. El Salvador’s outcome will have a global impact, as it will inform the future decisions of governments and central banks exploring CBDCs.”

23. Wouter Witvoet, CEO of DeFi Technologies:

“In the past, El Salvador struggled with trust in its monetary policy, so in 2001, it ‘dollarized’ its economy and effectively gave control of its monetary system to the U.S. Federal Reserve. It saw the U.S. dollar as a more stable, trustworthy currency than its own.

Since the 2008 global financial crisis, the U.S. has been pursuing a very experimental form of monetary policy involving tools like quantitative easing and a central bank that now directly monetizes, or purchases, government-issued debt to keep interest rates low.

This is a playbook that is dictated by short-term needs and is driving down the value of the dollar. For a country like El Salvador, the adoption of Bitcoin as a legal tender is a hedge that Bitcoin will retain its value over the long term versus the dollar that has seen unprecedented levels of loss in buying power.

Where this goes over the long term remains to be seen, but this is just another example of an expanding list of countries and municipalities experimenting with use cases for Bitcoin and blockchain.”

US State Dept Urges El Salvador To Be ‘Responsible’ About Bitcoin Adoption

Victoria Nuland said the United States was taking a “tough look at Bitcoin” following a major ransomware attack and suggested El Salvador take a similar approach.

The U.S. Department of State’s Under Secretary of State for Political Affairs Victoria Nuland said El Salvador should ensure Bitcoin is well regulated under its new legal framework.

In a Wednesday press conference following a meeting with President Nayib Bukele, Nuland said the United States was taking a “tough look at Bitcoin” following the ransomware attack on the Colonial Pipeline and suggested El Salvador take a similar approach. The country passed a law in June making Bitcoin (BTC) legal tender, legislation that will go into effect on Sept. 7.

“I did suggest to the President that whatever Salvador chooses to do with regards to Bitcoin, you ensure that it is well regulated, that it is transparent and that it is responsible, and you protect yourself against malign actors,” said Nuland.

#ElSalvador
Victoria Nuland aseguró que en su reunión con el presidente @nayibbukele conversaron sobre la implementación del #Bitcoin como moneda de curso legal en el país.

Vía @cardozaTCS. pic.twitter.com/NsWmqsY3u0

— TCS Noticias (@tcsnoticias) July 1, 2021

Nuland’s meeting with the President as well as Minister of Foreign Affairs Alexandra Hill Tinoco was scheduled as part of a visit to El Salvador, Paraguay and Panama at the end of June to discuss migration, democracy, and regional goals.

However, it seems crypto may have been part of the planned agenda. U.S. officials including President Joe Biden have made public statements addressing ransomware attacks on critical infrastructure after the Colonial Pipeline cyberattack caused gas hoarding and shortages in certain areas of the United States.

The discussion on Bitcoin between U.S. and El Salvador officials comes as the International Monetary Fund, or IMF, is speaking with lawmakers in the Central America country regarding a loan to support the local economy. The U.S. State Department reportedly supports the financial agreement, though the IMF has expressed concerns over the country’s recent adoption of Bitcoin, saying the move “raises a number of macroeconomic, financial and legal issues that require very careful analysis.”

Blockstream Proposes Digital Blockchain Bond For El Salvador

Canada-based Blockstream Corp, a blockchain technology company, proposed the issuance of a digital U.S. dollar-denominated bond to El Salvador’s government as the nation rolls out plans to make Bitcoin legal tender.

Blockstream Chief Strategy Officer Samson Mow said company representatives met with El Salvador government officials to pitch the plan, and that officials expressed interest but still haven’t made a final decision.

Under the proposal, El Salvador would issue U.S. dollar bonds that pay a regular coupon via a tokenized security on a platform called Blockstream Amp, a Blockstream product used to issue and manage digital assets on the company’s Liquid Network blockchain.

A tokenized security would be more liquid than traditional securities because it trades on a cryptocurrency infrastructure that operates 24/7 and isn’t closed for bank holidays and weekends, Mow said. It also has the potential to reduce costs for issuers, he said.

Digital securities already trade on exchanges provided by companies such as INX Limited and tZERO Group, Inc.

El Salvador’s Finance Ministry didn’t respond to an email seeking comment.

Mining Division

Blockstream is using tokenized securities to finance its mining division by issuing a Blockstream Mining Note, and the company expects to raise $100 million with the offering, Mow said. In April, the European Investment Bank raised $121 million from a two-year digital bond registered in the public Ethereum blockchain network.

Using token securities for a sovereign bond issuance would be a huge step forward, Mow said.

“To have it done by a sovereign nation would be the next level up,” Mow said. “It would be groundbreaking if this were a path they were to pursue.”

Blockstream will also provide kits for El Salvador to set up satellite stations so residents can access the company’s satellite network, and will begin setting up the dishes in the coming weeks, he said.

Updated: 7-9-2021

UN Commission Serves New Warning Against BTC Adoption In El Salvador

ECLAC executive secretary stressed that there is no study yet that would have investigated potential risks or benefits of El Salvador accepting BTC as legal tender.

The Economic Commission for Latin America and the Caribbean, or ECLAC, a United Nations’ regional commission to encourage economic cooperation, is the latest regulator to raise concerns about El Salvador’s decision to accept Bitcoin (BTC) as legal tender.

ECLAC executive secretary Alicia Bárcena has warned that El Salvador’s Bitcoin move poses a number of systemic risks as well as risks related to money laundering, local news agency Diario El Mundo reported Friday.

Bárcena emphasized that there is no study yet that would have investigated potential risks or benefits of El Salvador accepting BTC as legal tender. She expressed confidence that El Salvador is likely to face scrutiny and risks from the Financial Action Task Force, or FATF, regarding its decision to move into Bitcoin.

The official added that Bitcoin does not fulfill some basic functions of money and is subject to extreme volatility, which could pose “multiple systemic risks” in a dollarized economy.

In issuing the warning, the ECLAC joins a growing number of global authorities and organizations getting increasingly concerned about El Salvador’s decision to adopt BTC as legal tender after Salvadorian president Nayib Bukele announced historic legislation in early June.

The International Monetary Fund was one of the first regulators to subsequently call attention to the matter, warning that accepting Bitcoin as legal tender in the country could pose legal and financial concerns.

On June 17, the World Bank refused El Salvador’s request for help on the country’s transition to adopting Bitcoin, citing issues related to Bitcoin’s alleged environmental impact and transparency.

Earlier today, Bank of Russia deputy governor Alexey Zabotkin also expressed concerns over El Salvador’s Bitcoin move, arguing that large economies are unlikely to follow the country’s call to adopt BTC as legal tender as this poses risks to financial stability.

Updated: 7-12-2021

El Salvador Move Could Strain Bitcoin Blockchain, JPMorgan Says

El Salvador’s declaration of Bitcoin as legal tender could create challenges for both the country and the cryptocurrency, according to a team from JPMorgan Chase & Co.

Bitcoin trading volumes commonly exceed $40 billion to $50 billion per day, but most of that is internalized by major exchanges, said a group from JPMorgan including Steve Palacio, Joshua Younger and Veronica Mejia Bustamante, in a report Thursday.

A large portion of Bitcoin is locked up in illiquid entities, with more than 90% not changing hands in more than a year — with a “significant and rising fraction held by wallets with light turnover,” they added.

“Daily payment activity in El Salvador would represent ~4% of recent on-chain transaction volume and more than 1% of the total value of tokens which have been transferred between wallets in the past year,” the report said, with the illiquidity and nature of the volume “potentially a significant limitation on its potential as a medium of exchange.”

El Salvador President Nayib Bukele’s initiative to make Bitcoin legal tender in the country has set off a raft of debate about whether it’s beneficial and what the ramifications could be. The 39-year-old Bukele has said that Bitcoin will help counter the country’s low banking penetration rate and cut the cost of sending remittances.

But the International Monetary Fund — which is in discussions with El Salvador about its credit program now — is among those who have questioned that rationale.

Even many proponents of Bitcoin say that, while there’s an argument it’s a good store of value, its utility as a payments mechanism is limited.

“Bitcoin is the worst payment system ever invented. It’s terrible,” said William Quigley, the co-founder of stablecoin Tether and a pioneer of multiple aspects of the cryptocurrency space, in a recent video interview. “Almost any token is better than Bitcoin as a payment system.”

Other Challenges JPMorgan Sees For El Salvador’s Adoption Of Bitcoin As Legal Tender Include:

* Recent surveys suggest widespread skepticism and hesitance of Bitcoin as a medium of exchange.

* Bitcoin’s high volatility poses a particularly large challenge in a bimonetary system alongside official dollarization.

* A persistent imbalance of demand for Bitcoin/U.S. dollar conversions on the government platform could “cannibalize onshore dollar liquidity” and eventually introduce fiscal and balance of payments risk.

Updated: 7-20-2021

Coercion And Coexistence: How El Salvador’s Bitcoin Law May Change Global Finance

Lending pools, U.S. tax law and the World Bank all stand in the way of El Salvador’s move to adopt Bitcoin as legal tender. But in the end, the world’s first digital currency may win.

“Clearly, the thing that’s transforming is not the technology — the technology is transforming you.” Jeanne Ross, formerly of the MIT Sloan Center for Information Systems Research.

If El Salvador’s “Bitcoin Law” was “the shot heard round the world” for Bitcoin, then when the International Monetary Fund (IMF) and the World Bank questioned the legislation, it was the incumbent empire striking back.

However, if El Salvador can implement its Bitcoin Law despite numerous technical and legal hurdles, it may force changes upon the organizations that oppose it and hasten reforms in how United States tax and commercial laws treat cryptocurrencies.

The Surprise Shot Heard Round The World

After winning approval by a supermajority of its congress, El Salvador enacted its Bitcoin Law and became the first country in the world to adopt Bitcoin as legal tender. The Bitcoin Law passed mere days after El Salvador’s president, Nayib Bukele, first announced his plans to introduce it. The short time between Bukele’s surprise announcement and the passage of the Bitcoin Law prevented opponents from blocking it.

However, in a prescient series of tweets, Avanti Financial Group CEO and Bitcoin advocate Caitlin Long predicted “a big fight” over the Bitcoin Law and warned that “the world is about to pressure it [El Salvador] given what’s at stake.”

1/ THREAD ABOUT A HISTORIC DAY in #bitcoin: #ElSalvador president publicly announced support for legislation to make #BTC legal tender. *IF* it does become law, it wld have many secondary effects. Steel yourselves bc a big fight on this probably coming tho https://t.co/BrrNxaLzpZ

— Caitlin Long 🔑 (@CaitlinLong_) June 6, 2021

The IMF’s Leverage And Lending Pools

Indeed, the day after El Salvador passed the Bitcoin Law, the IMF claimed that the legislation raised “a number of macroeconomic, financial and legal issues that require careful analysis.” The World Bank, which frequently cooperates with the IMF, joined the fray and proclaimed that it had rejected El Salvador’s request for help with implementing its Bitcoin Law because of “environmental and transparency shortcomings.”

While these proclamations from powerful Washington, DC-based multinational organizations embody the fight that Long predicted in her tweets, the Bitcoin Law’s forward momentum may hasten reform in how these organizations and laws in the United States address cryptocurrency.

Based on its governing documents, the IMF is more likely to resist the Bitcoin Law by exerting economic pressure than by legally challenging the legislation of a sovereign nation. IMF member nations, including El Salvador, are bound by a code of conduct memorialized in the IMF Articles of Agreement.

These articles require members to allow their currency to be exchanged for foreign currencies freely and without restriction, keep the IMF informed of changes in financial and monetary policies that will affect fellow members’ economies, and modify their policies to accommodate the needs of the entire membership.

The IMF administers a pool of money from which its members can borrow “to help nations abide by the code of conduct” in its Articles of Agreement. In other words, the IMF enforces its articles through access to its lending pool.

Updated: 7-25-2021

El Salvadorians Take To The Streets To Protest Bitcoin Law

Those who marched against Bitcoin this week claimed the cryptocurrency was too volatile and would allow businesses to “launder ill-gotten money.”

Protesters calling themselves the Popular Resistance and Rebellion Block have come out against El Salvador’s government passing a law making Bitcoin legal tender.

A Tuesday tweet from local news outlet El Mundo shows El Salvadorians carrying banners saying “no to Bitcoin” in the streets of San Salvador demanding a repeal of the country’s Bitcoin law. Legislative assembly members Anabel Belloso and Dina Argueta addressed the protesters after first meeting the group separated by a barrier of razor wire.

RT @SusanaPenate: Miembros del Bloque de Resistencia y Rebeldía Popular llegaron a presentar una propuesta de derogar la Ley Bitcoin. Salen a recibirlos Dina Argueta y Anabel Bellosopic.twitter.com/CXFLDW4tsr

— Diario El Mundo (@ElMundoSV) July 20, 2021

In a letter made available at the protest, the Popular Resistance and Rebellion Block group claimed that President Nayib Bukele passed the law making the cryptocurrency legal tender in the country without proper consultations with the people. It also cited the volatility of Bitcoin (BTC), comparing investing in the cryptocurrency to playing the lottery: “betting on the lottery is a voluntary act, while Bitcoin is required by law.”

However, the group’s main grievance around the Bitcoin legal framework seemed to be centered around a perceived disparity in the cryptocurrency’s usage by the government when compared with the average resident in El Salvador. Protesters said Bitcoin “only serves some large businessmen, especially those linked to the government, to launder ill-gotten money.”

“Entrepreneurs who put their capital in Bitcoin will not pay taxes on their earnings,” said the letter.

“In addition, to apply Bitcoin the government will spend millions of dollars of the taxes paid by the people.”

They Added:

“Bitcoin would facilitate public corruption and the operations of drug, arms and human traffickers, extortionists and tax evaders. It would also cause monetary chaos. It would hit people’s salaries, pensions and savings, ruin many MSMEs, affect low-income families and hit the middle class.”

Though passed by El Salvador’s government and signed into law by Bukele in June, the law recognizing Bitcoin as legal currency in the country will not go into effect until Sept. 7. The Popular Resistance and Rebellion Block’s protest was aimed at government officials to demand the law be repealed. In addition, the World Bank has also refused to help El Salvador transition to a Bitcoin-friendly framework, given its “environmental and transparency shortcomings.”

During a scheduled visit by the U.S. State Department earlier this month, Under Secretary of State for Political Affairs Victoria Nuland suggested El Salvador ensure Bitcoin is well regulated and transparent, but did not explicitly say anything against the country’s move to a more digital economy.

Some proponents of the law including Bukele have suggested Bitcoin could help facilitate remittance payments from El Salvador citizens living abroad and lessen the country’s reliance on the U.S. dollar.

Investors Inundate Zap’s Mallers After El Salvador Bitcoin Push

Just a few months ago, Jack Mallers was pretty much indistinguishable from the horde of baseball cap and hoodie-wearing young men touting Bitcoin. Now venture capitalists are clamoring to offer him money.

The 27-year-old founder of a Bitcoin money-transfer startup Zap Solutions Inc. burst onto the mainstream in June when El Salvador’s President Nayib Bukele embraced Bitcoin. Mallers, who was reduced to tears while on stage at a Miami conference when the announcement was made via video, had been working behind the scenes with the government to make it happen. Zap expects to finalize fresh funding soon, Mallers told Bloomberg News.

While it’s not El Salvador’s exclusive Bitcoin payments provider, Zap’s app, Strike, is the most popular mobile application in the Central American nation; it allows anyone to send or pay with Bitcoin for free.

Investors have taken notice. Mallers, who is based in Chicago, said in an interview that he is hoping to close a new funding round in the next few months. He wouldn’t disclose how much the company wants to raise, or comment on a valuation. In April 2020, Zap raised $3.5 million for a $16.5 million post-money valuation.

“The company seems to get more and more valuable, with more and more inbound interest and demand,” Mallers said.

The money will go toward an ambitious global rollout. Strike could be available in 50 to 100 countries by year-end, up from just El Salvador and the U.S., Mallers said. The service is being tested in the U.K., Canada and Australia. By year-end, Zap hopes to have millions of customers, up from in the hundreds of thousands today, he said.

The company likely faces hurdles such as varying regulations and licenses. While it’s registered with FinCen, Zap doesn’t appear to have a license in New York, for example.

“We fully plan on complying and building healthy relationships,” Mallers said.

Zap also plans to issue a Visa card later this year, which will let customers earn rewards in fiat or Bitcoin. The startup is a partner of Visa, which has formed similar business alliances with other crypto companies.

Whether the push turns into a successful company remains to be seen, according to Aaron Brown, a crypto investor who writes for Bloomberg Opinion.

“Mallers and Strike have a strong technology and an even strong ability to forge partnerships, including with Visa and El Salvador,” Brown said. “But this is an area with very big money, fast-changing sophisticated technology and strong political aspects. Picking a winner is not easy.”

There’s much about the startup that’s unknown. Mallers declined to say how many employees he has, for example. It had seven a year ago, he said.

While Mallers is known for posting provocative photos on Twitter, he actually is a scion of the world of traditional finance. His grandfather was the youngest chairman of the Chicago Board of Trade. His father sold a discount futures brokerage.

“Thanksgiving was talking about agricultural commodity derivatives,” he said. By the time he was 18, Mallers was a two-time state chess champion, and he dropped out of college about a month in. So his father suggested he take a coding boot camp.

Mallers said he would stay in his room for weeks at a time learning about Bitcoin. It helped that his stepmother is also immersed in the crypto world and goes by BitcoinMom on Twitter.

“We kind of formed this Bitcoin team,” Mallers said, explaining it was a sort of a family hedge fund. “Dad, stepmom and me. He is familiar with derivatives. My stepmom started the first Bitcoin Meetup in Chicago. My role was in engineering.”

Mallers’ name is listed on a patent, from his time working at a startup before turning to Zap. His parents funded efforts that eventually turned into Strike, he said.

Updated: 7-27-2021

Inside El Salvador’s Bitcoin Experiment

Cointelegraph traveled to El Salvador to investigate whether citizens believe its new Bitcoin Law will be beneficial to the nation’s economy.

The country’s new Bitcoin Law, which will be enforced starting Sept. 7, will allow Salvadorans to use Bitcoin (BTC) as a currency to purchase goods and services, as well as to pay taxes and debt.

El Salvador’s president, Nayib Bukele, has stated that Bitcoin adoption will hugely benefit the 70% of the local population that lacks access to banking services. He also believes that it will attract investments and create new jobs.

However, the Bitcoin Law has raised multiple concerns. Skeptics say the cryptocurrency’s high volatility could pose a threat to the country’s financial stability. A very low internet penetration rate, along with a lack of education about Bitcoin and cryptocurrency within the country, could also prevent Bitcoin from reaching widespread adoption in El Salvador.

To boost Bitcoin adoption, President Bukele has promised to build the necessary infrastructure. This includes 1,500 Bitcoin ATMs and a government wallet meant to guarantee instant conversions of Bitcoin into dollars.

Will that be enough for Bukele’s monetary experiment to succeed? To answer this question, Cointelegraph talked with the people of El Salvador, as well as with critics and supporters of the Bitcoin Law.

Updated: 7-29-2021

The IMF’s Self-Serving Case Against Bitcoin’s Role In El Salvador

The International Monetary Fund has finally expanded on its “issues” with El Salvador’s adoption of bitcoin. There’s not much behind the curtain.

In June, I wrote that El Salvador’s decision to adopt bitcoin (BTC, -1.07%) as legal tender was “the most significant single development in the history of cryptocurrency so far.” If anything, that was confirmed when the International Monetary Fund, a global development bank closely tied to the world’s richest countries, quickly declared that the move raised “a number of macroeconomic, financial and legal issues.”

The statement amounted to a veiled threat, because El Salvador was in negotiations for a $1 billion loan from the IMF. But the IMF at the time didn’t provide any real detail about what “issues” it saw with the national adoption of bitcoin.

This week, we got more insight into what those issues might be.

Well, not really.

What we did get is an IMF blog post titled “Cryptoassets as National Currency? A Step Too Far” that amounts to a laundry list of boilerplate high-level critiques of cryptocurrency. It includes little nuance about their purported weakness as a national currency, though, and is even less specific about El Salvador’s plan.

Though it does include some significant points, most of the statement could have been cribbed from a Peter Schiff Twitter rant: Its main arguments include cryptocurrency’s volatility, use for money laundering and electricity demand, which range from irrelevant to outright false.

In fairness, it was an informal blog post meant for a broad audience. But the lack of subtlety from an entity that has huge sway over the well-being of many of the world’s most vulnerable people is disappointing, if not outright frightening. It would seem to reinforce the sense that the IMF’s objection to Bitcoinization is less about the stability of economies daring to innovate than about maintaining the IMF’s own position of power over them.
Fake Crypto Problems

I’ll dispense briefly with several of the points made in the IMF post. One is that the volatility of cryptocurrencies makes them untenable for long-term debt obligations, or even for short-term applications like business pricing, with disruptive economic effects. This is a reasonable argument against adopting bitcoin as the sole currency of a sovereign nation today.

But it doesn’t address the actual proposal in El Salvador, which would maintain the country’s current currency for day-to-day pricing, payments and debts, while adding bitcoin as an option for both payments and government reserves. This could be seen as a transitional phase.

The long game here would theoretically see bitcoin (or another crypto asset) adopted by a growing number of countries, which would eventually increase its stability against other currencies. Given crypto’s track record over the past decade, it’s not a scenario to bet against.

The second of the IMF’s specious claims is that crypto adoption would create money-laundering risk. Again, there are two rebuttals here. First and foremost, it is becoming increasingly clear that cryptocurrency has limited utility for money laundering, because while it’s impossible to stop, it’s also easily traced.

Criminals themselves know that: Criminal activity on crypto networks declined 57% from 2019 to 2020 – from a miniscule $4.5 billion to an even more miniscule $1.9 billion, according to CipherTrace – while the value of cryptos as a whole more than doubled.

The second rebuttal, to engage in some whataboutism, is that normal banks handle demand for money laundering just fine. The United Nations estimated that $800 billion to $2 trillion of criminal proceeds is cleaned and hidden each year – at the top end, 33% more than the total circulating supply of all cryptocurrency in existence today.

The IMF also waves (+1.65%) the flag of environmentalism by citing critiques of cryptocurrency’s electrical demand.

The debate around mining bitcoin and fossil fuel emissions is certainly knotty and important, and crypto that has less of an impact on the environment should be an industry goal. But the critique borders on offensive when it’s being used as a bludgeon to discipline developing countries.

The advanced economies that control the IMF spent decades creating the climate mess we find ourselves in. For them to turn around and use their own sins as a cudgel to keep smaller, less developed, and mostly vastly less polluting countries from making their own monetary decisions crosses the line from illogical to sadistic.
Real Crypto Problems

The IMF does cite two genuine issues with the use of crypto as a national currency – though even one of those is irrelevant to the case of El Salvador, which triggered all the hand-wringing in the first place.

The IMF rightly points out that adopting a global cryptocurrency as a national currency would remove a nation’s ability to set its own monetary policy. A normal national currency supply is expanded according to the needs of the economy, which is often important to maintaining economic growth.

But El Salvador hasn’t had control of its money supply for decades. Its primary national currency since 2001 has been the U.S. dollar. Seven other countries also use the dollar as their official currency, most either very small or struggling with a legacy of political instability. The list includes not only El Salvador, but also East Timor, Ecuador, Guam, the Marshall Islands, Palau, Panama and Zimbabwe.

In theory, the dollar represents even greater risk to third-party adopters than bitcoin does, because the dollar can be weaponized in various ways for the benefit of the U.S. No less a crypto critic than British economist Frances Coppola has argued (in these pages) that switching to a neutral currency like bitcoin could be a stability upgrade for dollarized nations.

The second valid argument mooted by the IMF is simply that individuals need access to the internet to use crypto, and that access is quite limited worldwide. Only about 60% of the world’s population has mobile or hardwired internet access, and that’s significantly lower in the very same developing or unstable nations most likely to benefit from the adoption of a dollar alternative.

Again, though, that doesn’t entirely apply to El Salvador, because it’s keeping dollars in circulation alongside bitcoin, solving the daily payments problem. Broadly, such a dual-currency system could mean bitcoin would be used only semiregularly, for remittances or international payments, by everyday citizens.

This is even more true of the possible use of bitcoin as a national reserve, because that’s the province of central banks that probably have decent broadband.

But it is nonetheless true that access limitations mean adoption of a purely digital currency system wouldn’t be equitable in most countries. So maybe one valid argument out of five isn’t so bad.
What’s Really Going on Here?

It may seem puzzling that the IMF would throw so much ill-considered rhetorical spaghetti at the wall, as if only to see what sticks. In the most generous interpretation, it’s a deeply conservative institution whose knee-jerk opposition to change may play some helpful role in moderating any rushed moves into national adoption of cryptocurrencies.

But to play that role credibly, the IMF will have to strive for a lot more subtlety in its critiques. For now, its opposition to the growth of an alternative financial system has so little substance that it seems like nothing more than a very powerful institution defending its turf.

Updated: 8-2-2021

Bank of America Outlines 4 Potential Benefits Of El Salvador’s Bitcoin Strategy

“More than 70% of the adult population of El Salvador does not have a bank account,” reads the latest Global Research report from Bank of America. “For that reason, democratizing access to electronic payments, through Bitcoin, has a progressive touch.”

Bank of America, one of the nation’s largest financial institutions based on total assets, believes El Salvador could have a lot to gain with its latest foray into Bitcoin (BTC).

In a report published last week, analysts at the bank said El Salvador’s decision to recognize BTC as legal tender could streamline remittances, promote financial digitization, provide consumers with greater choice, and open up the country to American firms and digital currency miners.

The bank noted that remittances account for a staggering 24% of El Salvador’s gross domestic product, but a sizable chunk of that goes toward transaction fees.

“Using Bitcoin for remittances could potentially reduce transaction costs compared to traditional remittance channels,” the report said, according to an image provided by state-backed Diario El Salvador. “The idea is that Bitcoin could be used as an intermediary for the cross-border transfer so that dollars are converted to Bitcoin by the sender and then converted back to dollars domestically by the receiver.”

#ElSalvador El Presidente @nayibbukele comparte esta mañana algunas de las oportunidades que @BankofAmerica ve en El Salvador, tras la adopción del #Bitcoin pic.twitter.com/08D1RuGFYI

— Diario El Salvador (@elsalvador) August 1, 2021

In June of this year, El Salvador became the first nation-state to accept Bitcoin as legal tender, marking an important milestone in the digital currency’s evolution from obscurity to mainstream acceptance. The decision to integrate BTC into the country’s financial system has been met with criticism by the International Monetary Fund and the United Nations’ Economic Commission for Latin America and the Caribbean. Meanwhile, JPMorgan Chase believes El Salvador’s Bitcoin gambit could place additional pressure on the network’s already limited ability to serve as a medium of exchange.

Survey data shows half of Salvadorans are skeptical about using BTC as legal tender. Those who choose to adopt BTC for transactions can use the state-backed Chivo Bitcoin wallet, among many other options available to them.

Since El Salvador recognized Bitcoin as legal tender, several other Latin American nations have hinted at pursuing a cryptocurrency strategy of their own. However, until now, no other country has followed in El Salvador’s footsteps.

Updated: 8-17-2021

Fitch Ratings Warns El Salvador’s ‘Bitcoin Law’ Will Pose Risk To Local Insurers

Fitch warned that mainstreaming Bitcoin without clarity can introduce volatility and operational risks for Salvadorans.

Fitch Ratings has become the latest global credit rating agency to warn El Salvador against adopting Bitcoin (BTC) as legal tender, expressing concerns that crypto assets could cause systemic risks for the Latin American nation.

Citing the country’s lack of clarity in Bitcoin’s implementation in mainstream markets, Fitch Ratings warned about the inherent volatility and operational risks for citizens associated with the crypto ecosystem. In addition, the agency pointed out El Salvador’s ongoing exposure to low credit quality securities, stating that “additional holdings of high-risk assets will only compound this risk.”

In early June, the Salvadoran Legislative Assembly passed President Nayib Bukele’s controversial “Bitcoin Law,” paving the way for BTC to be recognized as legal tender alongside United States dollars starting Sept. 7, 2021. As such, all Salvadoran businesses will be required to accept Bitcoin in exchange for goods or services.

Fitch predicts that insurance firms, which made 21% of El Salvador’s total capital in 2020, will be hesitant to adopt Bitcoin for claims or benefit payments. The agency speculates that insurers will likely seek to “convert Bitcoin into USD as quickly as possible to limit exchange risks” should policyholders opt to pay premiums in digital currency.

While governments and leaders continue to weigh the pros and cons of Bitcoin’s move into mainstream finance, El Salvador finance minister Alejandro Zelaya has assured the International Monetary Fund (IMF) that the country will continue to use both U.S. dollars and Bitcoin.

Before this development, the country had requested a $1.3-billion loan from the IMF, which has now proved to become a conflict of interest for the United Nations-led organization. Moreover, the World Bank has also backed out from helping El Salvador make Bitcoin legal tender.

Updated: 8-19-2021

Draft El Salvador Bitcoin Banking Regulations Released

El Salvador’s Banco Central de Reserva has released two documents detailing how banks should deal with Bitcoin.

The central bank of El Salvador, Banco Central de Reserva (BCR), has published draft regulations on how banks should handle Bitcoin.

Two documents were released for consultation on Aug. 17 instructing banks and financial institutions how to offer Bitcoin-related services to their customers.

The first, titled “Guidelines for the Authorization of Operation of the Digital Wallet Platform for Bitcoin and Dollars” (in Spanish), defines BTC as legal tender according to the recently drafted Bitcoin Law which was passed by El Salvador’s legislature on June 9 and will see the country formally adopt the digital asset on September 7.

The second document titled “Technical Standards to Facilitate the Application of the Bitcoin Law” is a longer and more detailed version of the first document.

Financial entities must apply to the central bank to offer digital wallets, the guidelines stated. Applications must detail the type of product being offered, and include target market details, risk assessments, charges to customers, education provisions for customers, and complaint procedures.

Know-your-customer (KYC) verification will be required for all customers though it was unclear whether the national ID card, which is used for basic bank accounts, would suffice for a crypto wallet. Full anti-money laundering (AML) procedures such as transaction monitoring and analysis would also be applied.

Two-way Bitcoin-to-dollar convertibility must be provided and the bank is allowed to charge a fee. According to a translation hosted by Attack of the 50 Foot Blockchain author David Gerard:

“The electronic platform used by the digital wallet administrators must allow the Central Bank access in real time to all information related to the operations carried out, as well as information requested by clients.”

All Bitcoin held by banks and companies must be fully backed as opposed to a fractional reserve. Dollars will be held at the central bank while BTC is held with a custodian, services for which can be contracted out.

Article 29 of the second document requires the bank or financial institution to warn customers that Bitcoin is volatile, transactions cannot be reversed, and that if they lose their private keys, then they lose the BTC.

There were no provisions for accounting standards or standard government exchange rates for converting Bitcoin into fiat and vice versa.

On August 16, American credit rating agency Fitch Ratings stated that the BTC adoption plan will likely be a credit negative for local insurance companies due to volatility and risk concerns.

Bitcoin Use Will Be ‘Totally Optional’ In El Salvador, Finance Minister Says

According to Alejandro Zelaya, businesses will not be penalized if they do not accept bitcoin.

In keeping with Alejandro Zelaya, using the cryptocurrency will likely be optionally available, and companies won’t be penalized if they don’t settle for it.

Using bitcoin (BTC, +0.74%) and a digital pockets in El Salvador will likely be “completely optionally available,” and companies that don’t settle for the cryptocurrency won’t be sanctioned, El Salvador’s finance minister Alejandro Zelaya stated Tuesday.

In a televised interview throughout this system Frente a Frente hosted by journalist Moisés Urbina, Zelaya stated that the greenback will stay as the principle foreign money of reference within the nation, and would be the one which companies, the federal government and all others will use for his or her accounting.

Zelaya’s feedback contradicted article 7 of the bitcoin legislation handed in June, which stipulated that bitcoin have to be accepted as a type of cost by “each financial agent.”

Requested whether or not it was essential to remove that article, Zelaya requested why and didn’t broaden on the topic.

El Salvador’s Central Financial institution didn’t make clear issues on Tuesday in a consultative draft with technical requirements to facilitate the appliance of the bitcoin legislation. The draft said that the establishments obliged to adjust to these requirements will likely be banks, cooperative banks and financial savings and credit score societies “” in offering the service of convertibility of {dollars} and bitcoin and vice versa.

In one other doc, entitled Tips for the Authorization of the Operation of the Digital Pockets Platform for Bitcoin and {Dollars}, the Central Financial institution of El Salvador stipulates that wallets might want to implement know-your-customer insurance policies.

“Purchasers of the digital pockets could also be people and authorized entities resident or not within the nation that adjust to the necessities and requirements of know your buyer and prevention of cash and asset laundering, financing of terrorism and proliferation of weapons of mass destruction,” the doc said, including that these necessities will likely be “established following the technical norms issued by the Central Financial institution for these functions and the worldwide treaties and conventions issued on this regard.”

Updated: 8-24-2021

El Salvador Readies Bitcoin Rollout With 200 ATMs For Conversion

El Salvador began installing Bitcoin ATMs, allowing its citizens to convert the cryptocurrency into U.S. dollars and withdraw it in cash, as part of the government’s plan to make the token legal tender.

The government will install 200 of the teller machines to initially accompany its digital wallet called Chivo, a local slang term for ‘cool,’ President Nayib Bukele said on Twitter. Transactions will be commission free, he said, adding that there will also be 50 financial branches across the country for withdrawing or depositing money.

También habrán #CajerosChivo en todas partes y podrán retirar en EFECTIVO, las 24 horas del día y SIN COMISIONES, por más que la oposición diga lo contrario.

El problema para ellos es que podrán convencer a algunas personas de que sí habrán comisiones, pero solo hasta el 7 pic.twitter.com/H8gkYTEucc

— Nayib Bukele (@nayibbukele) August 23, 2021

Adopting Bitcoin will save Salvadorans $400 million per year in fees for receiving remittances from abroad, Bukele said.

El Salvador’s Bitcoin law will take effect on Sept. 7 and Salvadorans will be able to download the government’s Chivo digital wallet, enter their ID number and receive $30 in Bitcoin, Finance Minister Alejandro Zelaya said in an local TV interview on Monday. The government has created a $150 million fund to back Bitcoin to U.S. dollar conversions, he said.

El Salvador President Announces Infrastructure Already Being Built Ahead Of Country’s Bitcoin Adoption

According to Nayib Bukele, there will be 200 ATMs and 50 branches capable of converting Bitcoin into U.S. dollars starting on Sept. 7.

Nayib Bukele, the president of El Salvador and the principal figure behind the country’s adoption of Bitcoin (BTC), said residents will have the opportunity to convert their crypto to fiat immediately after Bitcoin is recognized as legal tender.

In a Sunday announcement on Twitter, Bukele said 4.5 million adults in El Salvador would have the option of HODLing their Bitcoin once the country officially accepted the cryptocurrency as legal tender or “withdraw[ing] it in cash at any of the 200 ATMs.” According to the El Salvador president, there will also be 50 branches capable of withdrawing or depositing fiat for residents to hold crypto or immediately liquidate their salaries.

Bukele previously said that the government would be building the infrastructure to support a state-issued Bitcoin wallet, called Chivo. The president claimed that “Chivo ATMs” will eventually be “everywhere” and allow El Salvadorans to withdraw cash 24 hours a day without paying commissions on their holdings, but no one will be forced to use them.

“What if someone doesn’t want to use Bitcoin?” said Bukele. “Don’t download the [Chivo] app and continue living your normal life. Nobody is going to take your dollars […] Someone can always queue up at Western Union and pay a commission.”

Los #PuntosChivo se están construyendo en todas partes.

Ahí podrán recibir ayuda en cómo utilizar la aplicación, como funciona el #bitcoin, como retirar o depositar dinero, como usar los cajeros y como recibir dinero de cualquier parte del mundo.

Todo SIN COMISIONES, a nadie. pic.twitter.com/mBU5G8OHzb

— Nayib Bukele (@nayibbukele) August 23, 2021

The El Salvador president has regularly spoken of the benefits that cryptocurrency can bring to the Central American nation since announcing he would be introducing legislation to make Bitcoin legal tender at the June Bitcoin 2021 conference in Miami. The bill later passed the nation’s Legislative Assembly and is scheduled to be effective starting Sept. 7. Bukele has also called on a state-owned geothermal power company to make its facilities available to Bitcoin miners.

As data from Cointelegraph Markets Pro shows, the price of Bitcoin is $49,796 at the time of publication, having risen more than 11% in the last 7 days. Earlier today, the price of the crypto asset briefly returned to more than $50,000 for the first time since May.

Updated: 8-26-2021

El Salvador’s Bitcoin Adoption May Transform Remittances In Central America

Reduced remittance costs could prove significant in justifying El Salvador’s adoption of Bitcoin as legal tender.

The Central American Bank for Economic Integration (CABEI) has identified remittances as an important aspect of El Salvador’s Bitcoin (BTC) adoption policy.

According to Reuters on Tuesday, the regional development bank expects other Central American nations to pay close attention to Bitcoin’s impact on remittance costs in El Salvador.

Speaking to Reuters, Dante Mossi, executive president of CABEI, stated that neighboring countries will be incentivized to follow El Salvador’s example if Bitcoin offers significant cost reduction in the remittance market.

The CABEI executive described El Salvador’s Bitcoin adoption policy as an “out of this world experiment” that could foster greater financial inclusion in the country. Thus, the regional bank is helping El Salvador to create a technical framework for Bitcoin adoption.

According to Carlos Sanchez, investment chief at CABEI, the regional bank is keen on helping El Salvador ensure compliance with global money-laundering rules as the country attempts to utilize Bitcoin as a parallel currency. Sanchez described the process as being akin to navigating “yet to be explored” waters.

CABEI’s technical assistance flies in the face of opposition and criticism from the International Monetary Fund. Indeed, the move could be seen as an indication of Bitcoin’s ability to drive significant monetary policy discussions, at least on a national and regional level, even if the global financial establishment remains anti-Bitcoin.

In June, economist Steve Hanke warned that Bitcoin could destroy El Salvador’s economy, while Fitch Ratings has also raised alarms that the country’s Bitcoin Law could pose risks to local insurers.

El Salvador, for its part, appears to be moving forward with its plans to adopt Bitcoin as a fully recognized legal form of money in the country. Earlier in August, President Nayib Bukele announced plans to install 200 ATMs for easy BTC-to-United States dollar conversion.

The country’s central bank has also published draft regulations detailing how banks can deal with Bitcoin.

El Salvador Gets Ready For A Risky Bitcoin Experiment

Impoverished nation is defying warnings against using volatile crypto asset as official currency alongside U.S. dollar.

In less than two weeks, El Salvador will become the first country to adopt bitcoin as a national currency. No one knows what comes next.

The government of the impoverished Central American nation aims to spend up to $75 million as part of a plan to hand out $30 to people who sign up to an e-wallet called Chivo, or “Cool.” That software-based system would allow an estimated 2.5 million Salvadorans to buy goods or pay for services in U.S. dollars or bitcoin, El Salvador’s two official currencies as of Sept 7.

The foray into bitcoin risks wrecking El Salvador’s $26 billion economy. The indebted nation’s central bank could be forced to spend hard-currency reserves to buy bitcoin if the value of the crypto asset craters and consumers rush to the safety of the dollar. The government can’t print its own money—El Salvador ditched the colón in favor of the greenback two decades ago—and is struggling to earn dollars.

“Adopting bitcoin as legal tender puts us on a roller coaster,” says Carlos Acevedo, an economist who served as governor of El Salvador’s central bank from 2009 to 2013.

President Nayib Bukele has said that adopting bitcoin will help attract foreign investment, foster more and cheaper financial services and lower the cost of sending and receiving remittances, which reached a high of almost $6 billion last year. The 40-year-old president also wants to lure foreign investors to develop geothermal power from volcanoes to supply the large amounts of electricity needed for mining the cryptocurrency.

“With its very small economy, El Salvador was usually behind when it came to innovation,” Alejandro Zelaya, the country’s finance minister, said in an interview. “We are now becoming an investment destination.”

But the plan also carries significant risks because the government has limited access to debt markets, and faces rising borrowing costs and a wide budget gap. El Salvador is currently negotiating a $1.3 billion financial aid program with the International Monetary Fund, but didn’t consult the lender about the move, according to people familiar with the negotiations.

The IMF has warned against adopting highly speculative crypto assets as national currency, primarily because the privately issued tokens bypass authorities and central banks, which are tasked with preserving economic and currency stability.

For tiny El Salvador, bitcoin’s decentralized system opens doors to anonymous and illicit transactions, like money laundering or ransom payments, economists say.

“The country has no tools and no capacity to contain a speculative attack,” said Claudio Loser, a former Western Hemisphere director at the IMF.

U.S.-based ATM operator Athena Bitcoin Global plans to invest $1 million to install a network of bitcoin ATMs in the country. Salvadorans with the Chivo mobile wallet app would then be able to scan a QR code at the ATM’s large screen to buy and sell bitcoin in exchange for dollar bills.

Bitcoin is volatile, and can be vulnerable to so-called flash crashes in which news or social-media rumors spark a selloff. The price has swung between $47,000 and $50,000 just this week, and reached a peak of about $65,000 in April.

As a means of exchange, it could fuel sharp fluctuations in the prices of goods and services. The nation’s tax revenues would also swing wildly in conjunction with the price of bitcoin.

The Bukele administration has set aside $150 million for a convertibility exchange to allow automatic conversion of bitcoin to U.S. dollars and vice versa through the Chivo e-wallet. Mr. Zelaya compared that to consumers traveling abroad and buying goods in a foreign currency, saying he thought consumers would only gradually adopt the cryptocurrency.

Mr. Zelaya said he doesn’t expect bitcoin’s volatility to pose a problem in its use, and that the government facility to allow the instant convertibility of bitcoin to dollars is likely to be sufficient.

In late July, Moody’s Investors Service lowered El Salvador’s already speculative debt further into junk territory, citing “a deterioration in the quality of policy-making” because of bitcoin’s adoption and other measures. It also cited El Salvador’s difficulties accessing credit markets ahead of a heavy debt-repayment schedule as of next year, and uncertainty surrounding negotiations for fresh financing from the IMF.

The nearly completed bailout deal with the IMF stalled after legislators of Mr. Bukele’s New Ideas party replaced the attorney general and magistrates of the Constitutional Court in May, according to people familiar with the negotiations.

Last week, El Salvador’s central bank released the financial regulations for adopting bitcoin, including provisions to prevent money laundering and other illicit activities. Financial institutions will also be required to alert consumers of bitcoin’s volatility risks. Financial service providers have until Sept. 6 to submit comments on the regulations.

Updated: 8-31-2021

Retirees In El Salvador Protest Against Bitcoin Adoption

Retirees and veterans in El Salvador are worried that the government will start paying their pensions in Bitcoin instead of the U.S. dollar.

Amid El Salvador preparing to officially enforce the country’s Bitcoin Law in early September, Salvadorans took to the streets to protest over the adoption of Bitcoin (BTC) as an official currency.

El Salvador’s anti-Bitcoiners have expressed discontent regarding the government’s plans to adopt Bitcoin as legal tender, with hundreds of protesters marching through the capital, San Salvador, last Friday, Euronews TV network reported.

The demonstrators — including retirees, veterans, disability pensioners and workers — voiced their concerns over Bitcoin’s unstable price. The crowd was worried that the government would start paying their pensions in Bitcoin instead of the United States dollar.

“We know this coin fluctuates drastically. Its value changes from one second to another, and we will have no control over it,” Stanley Quinteros, a member of the Supreme Court of Justice’s workers’ union, reportedly said. Salvadorans also expressed concerns over the lack of knowledge and understanding of the technology needed to use cryptocurrencies like Bitcoin. Protesters held up signs saying, “We don’t want Bitcoin” and “No to corrupt money laundering.”

LA GENTE MAS HUMILDE NO QUIERE #BITCOIN, TODOS #NoQueremosBitcoin, solo los #BUKELES quieren el #Bitcoin . pic.twitter.com/YeAafHGCqS

— Blanca Huezo (@blanca_huezo) August 26, 2021

According to local reports, El Salvador’s latest anti-Bitcoin protests were apparently a part of a wider opposition campaign by local veterans protesting over low pensions on Friday. As such, some protesters reportedly demanded a pension increase from $100 to $300.

The latest anti-Bitcoin protests in El Salvador followed some growing skepticism about the country’s Bitcoin move. Last week, the Salvadoran Association of International Freight Carriers reportedly initiated anti-Bitcoin protests, reportedly demanding the government to reconsider mandatory acceptance of Bitcoin in El Salvador.

As previously reported by Cointelegraph, Salvadoran President Nayib Bukele announced legislation to accept Bitcoin as legal tender alongside the U.S. dollar in early June. The bill later passed the nation’s Legislative Assembly and is scheduled to be enforced on Sept. 7. Last week, the president clarified that Salvadorans would be free not to use Bitcoin, stating:

“What if someone doesn’t want to use Bitcoin? Don’t download the Chivo app and continue living your normal life. Nobody is going to take your dollars. Someone can always queue up at Western Union and pay a commission.”

Updated: 9-1-2021

Legislative Assembly of El Salvador Approves $150M Bitcoin Trust

El Salvador’s government has set aside $23.3 million toward rolling out crypto ATMs and $30 million to incentivize the use of the state-backed “Chivo” wallet.

El Salvador’s Legislative Assembly has passed legislation creating a $150-million Bitcoin Trust and supporting the development of crypto infrastructure and services across the country.

The bill passed on Tuesday, with 64 officials voting in favor and 14 opposing the trust’s creation. The trust is designed to facilitate the conversion of Bitcoin (BTC) into United States dollars and support the rollout of vital technological infrastructure enabling widespread adoption of crypto assets.

The news comes just one week before the country’s controversial Bitcoin Law is set to take effect. The impending legislation will recognize BTC as legal tender across El Salvador and is slated to take effect on Tuesday. Currently, U.S. dollars are used as legal tender in the country.

The Development Bank of El Salvador (Bandesal) has been appointed to oversee the trust’s operation.

The $150 million will be redirected from the country’s $500-million loan with the Central American Bank for Economic Integration (CABEI). The CABEI loan was originally taken for the purpose of economic recovery for small and medium-sized businesses.

Of those funds, $23.3 million is earmarked to support the installation of government-backed crypto ATMs — allowing local citizens to exchange between Bitcoin and USD. But $30 million has also been designated to offer incentives to encourage the adoption of the government’s digital wallet, Chivo.

In June, President Nayib Bukele announced the government would airdrop $30 worth of Bitcoin to every Salvadoran adult who downloads the Chivo wallet. However, El Salvador’s current population is 6.5 million, suggesting the government either believes adoption will be lower or has not allocated enough Bitcoin to go around.

In related news on Wednesday, asset tokenization and financial infrastructure company Koibanx announced it had signed a deal with the government of El Salvador to develop the country’s digital currency infrastructure with Algorand’s open-source blockchain at the core.

El Salvador’s Bitcoin Law has been met with some serious criticism and skepticism from international organizations and its own citizenry.

Minister of Economy María Luisa Hayém Brevé said the government was focused on cryptocurrency education and using crypto incentives as a means to soothe the high amount of uncertainty within its population.

Updated: 8-27-2021

Bitcoin Helped Tank El Salvador Debt. Now It’s Rising Back

The crypto-crazed crowd is a big fan of El Salvador President Nayib Bukele, a fellow traveler who is making Bitcoin an official currency of his nation.

The bond market has started warming up, too.

El Salvador’s bonds are rebounding from a rout that extended into early August as the country was downgraded deeper into junk and concern mounted over Bukele’s Bitcoin move and push to change the constitution.

In the last two weeks, they’ve returned 7.6%, more than the dollar-denominated debt of any other country besides Zambia, where the new president’s landslide victory bolstered speculation he can steer the country out of a default. Still, the bonds have lost 12.8% since the last trading day of April, as the country struggles to reach a deal with the International Monetary Fund.

Carlos de Sousa, an investor at Vontobel Asset Management in Zurich, said the nascent turnaround reflects how deeply the securities had fallen.

“It got to a point where it was ridiculous,” de Sousa said. “Neutral news or even relatively positive news came out and bond prices kept sliding. As people saw it, if there was a headline on El Salvador, sell, don’t even bother reading it.”

Sowing Concern

Bukele, 40, sowed concern among investors after his allies in Congress voted to fire five of the country’s top judges in May. He has also pushed to extend the presidential term to six years as part of a broad overhaul of the constitution.

The perceived power-grab created a rift with the U.S. that cast doubt on whether El Salvador could secure a new agreement with the IMF, which also said the adoption of Bitcoin could bring financial and regulatory risks. On July 30, Moody’s Investors Service downgraded El Salvador to seven steps below investment grade, citing controversial policies.

The yield on El Salvador bonds due in 2052 jumped to as much as 11% by Aug. 11, from about 8% in late April. The yield has since fallen to 10%.

Investors have been reassured by the country’s economic strength. Its central bank said earlier this month that gross domestic product will grow 9% this year, up almost three percentage points from the June forecast.

Repositioning

“In a sense, it has been a turning point because investors who were disappointed by Bukele after the election, already adjusted their portfolio, and now others, or even the same ones, are looking to reposition knowing all the negatives,” de Sousa said.

Moreover, there’s no major foreign debt payments coming until January 2023, buying the government time to steady its finances. Both Bank of America Corp. and Morgan Stanley now have a positive recommendation on El Salvador’s bonds. Siobhan Morden, head of Latin America fixed income at Amherst Pierpont, said last week that the odds have risen slightly of striking an IMF deal.

The country’s authorities have tried to address some the IMF’s concerns over the adoption of Bitcoin. Rules published by the central bank last week said it won’t be mandatory for business to accept Bitcoin once it becomes legal tender next month. Money laundering laws will also apply to the cypto-currency and the so-called Chivo wallet — which will allow people to make everyday purchases with Bitcoin — won’t be anonymous, allowing regulators to more easily track it.

Talks with Salvadoran authorities “are ongoing and need to carefully assess the impact of all new developments since May,” the IMF said in response to questions Friday. The discussions, which include the implementation of the Bitcoin law, remain focused on policies to strengthen economic governance and financial stability as well as inclusive growth.

“Further upside from here hinges on the IMF program negotiations,” said Thomas Jackson, director of fixed income at Oppenheimer & Co. in New York.

Updated: 9-3-2021

70% Of Salvadorans Opposed To Bitcoin Law As Sep. 7 Implementation Draws Near

The majority of El Salvadorans are skeptical of the country’s impending Bitcoin Law, with 90% of locals describing their understanding of crypto as poor or non-existent.

With less than a week to go before El Salvador’s Bitcoin Law takes effect on Sept. 7, a majority of citizens surveyed are opposed to government-mandated cryptocurrency adoption.

A survey conducted by the local Central American University’s (UCA) Institute of Public Opinion has found that 70% of Salvadorans believe President Nayib Bukele’s Bitcoin Law, recognizing the cryptocurrency as legal tender, should be repealed.

However more than 90% of those surveyed also admitted they have a poor understanding of cryptocurrency.

The institute recorded a dire public approval rating of just 7.64% for the president — the lowest registered during Bukele’s term so far.
El Salvador’s struggling economy

Attitudes to the Bitcoin Law appear intertwined with worries over the country’s poor economic performance.

The poll found that 45% of Salvadoran citizens believe that poverty and unemployment are the two most urgent problems facing the nation, and 43% believe that the nation’s economy will worsen with the passing of the Bitcoin Law.

According to The World Bank, 22.8% of El Salvador’s population are currently living below the poverty line, while the average annual income in the country is just $3,800. More than two-thirds of Salvadorans do not believe the local economy will improve even with an increase to the minimum wage.

The poll also found that 20% of Salvadorans “openly state that they do not know what a Bitcoin is,” while a further 70% confess to having a poor understanding of cryptocurrency. According to a rough translation, the researchers conducting the survey concluded:

“In other words, nine out of 10 Salvadorans have no clear knowledge of what this financial asset is.”

The findings echo a similar poll taken in July, which found that only 20% of locals approved Bukele’s forthcoming Bitcoin Law.
Bukele govt sprukes BTC

If there’s a sliver of optimism to be taken from the poll, it’s that the latest figures suggest the number of citizens with “no understanding” of Bitcoin has more than halved from July’s figure of 46% — suggesting efforts from the government to increase awareness have had some slight effect.

On August 30, Bukele shared the country’s first state-backed Bitcoin TV advertisement to Twitter, featuring animated tutorials on how the government’s “Chivo” digital wallet can be used to purchase goods and transfer value.

The following day, Bukele tweeted out images of Bitcoin ATMs that are slated for rollout across the country, with the President claiming that 50 physical terminals will be operational on Sept. 7. The President also estimated that the pivot to embrace crypto will save the country $400 million each year in remittance fees.

Los puntos Chivo ayudarán a que la población pueda utilizar @chivowallet.

Esto les dará libertad y seguridad financiera, aparte de recibir beneficios, entre ellos el ahorro de 400 millones de dólares al año en comisiones para enviar y recibir remesas.#Bitcoin #PuntosChivo pic.twitter.com/BtVrKiK5eZ

— Nayib Bukele (@nayibbukele) August 31, 2021

To help drum up support for Bitcoin, the government also launched a charitable campaign collecting BTC donations to fund dental treatments for impoverished Salvadorans. The “Bitcoin Smiles” campaign raised 1.02 BTC (roughly $50,000) in total from 797 individual contributions.

Despite the government’s best efforts, concerns clearly remain. Hundreds of local citizens turned out to protest the law in solidarity with unions and social organizations on Sept. 2.

Sindicatos y organizaciones sociales se pronuncian en contra del Bitcóin, en las afueras del Centro Cultural Cívico Legislativo. pic.twitter.com/C9ftS6OfCD

— LPGPolitica (@LPGPolitica) September 1, 2021

Updated: 9-5-2021

BTC Becomes Legal Tender In El Salvador: 5 Things To Watch In Bitcoin This Week

It’s a bullish leap of faith as Monday begins, with Bitcoin above $51,000 resistance and set to become an official national currency for the first time ever.

Bitcoin (BTC) Starts A New Week In A New Price Range Above $51,000 — Has It Beaten Crucial Resistance?

After the weekend turned from sideways to surge for BTC price action, bulls are now targeting $54,000 and higher.

Given how difficult it has been to hold $50,000 for any length of time over the past month — let alone beat out the sellers at $51,000 and higher — anything could happen in the coming hours and days.

With everything to play for, Cointelegraph takes a look at five factors worth considering when deciding on where Bitcoin may go next.

Have $51,000 Sellers Been Beaten?

It’s been variously referred to as “crucial” and the “final hurdle” by analysts — now, Bitcoin has passed $51,000.

The move was a long time coming — multiple attempts to crack $50,000, a psychological barrier in itself, all ultimately failed to flip it to support.

The volume of sellers above the range proved simply too much for bulls, who previously suffered a lack of momentum to sustain higher levels.

The night from Sunday to Monday changed the paradigm, however, and BTC/USD finally passed $51,000 for the first time since mid-May. The question now is “can it hold?”

For some, the answer is obvious.

“Targeting $54K,” analyst William Clemente summarized just before the real momentum took hold overnight, and Cointelegraph contributor Michaël van de Poppe described a $51,000+ BTC as “great.”

In the event, BTC/USD hit highs of just under $52,000 before cooling and consolidating near that peak.

This places the pair at the very top of the resistance wall, with only $52,000 remaining as a meaningful hurdle before much easier conditions for bulls return.

“There’s a vol gap here which is just air. Thus price could move quickly,” an excited Pentoshi added, analyzing the current spot price setup.

“Price is also above the PoC. Buyers in control.”

Pentoshi previously argued that $50,000 in fact had little sway as a technical landmark. But $48,700, he said on Saturday, was important to hold as a daily close in order to secure further upside.

El Salvador Adopts Bitcoin

A less technical but equally symbolic move is due for Bitcoin this week — it will become legal tender of a sovereign state for the first time in history.

On Tuesday, El Salvador will officially begin using Bitcoin as its national currency alongside the United States dollar.

Despite heavy warnings and even demands to abort the move from the likes of the International Monetary Fund and others, the country’s president, Nayib Bukele, has held firm. Now, Bitcoin and its adoption will begin a major new experiment.

“As El Salvador takes a massive technological jump into the financial future, before any other country, there are bound to be mishaps,” Alex Gladstein, chief strategy officer at the Human Rights Foundation, said in a series of tweets about the topic.

Gladstein cited political moves by Bukele’s government among other problems, which make Bitcoin adoption an interesting chapter in the country’s history. On a personal basis, however, the benefits for any Salvadoran remain obvious.

“For Salvadorans who are open-minded and willing to put in work to understand Bitcoin it could yield enormous fruits,” he added.

Meanwhile, a movement currently gathering steam on social media involves Brazil, where the Bitcoin community plans to each buy $30 of BTC in support of the law.

El Salavdor’s government passed a motion to create a $150-million Bitcoin fund last week.

Bitcoin On Track To Seal Fourth Straight Difficulty Gain

Bitcoin price action continues to be supported by fundamentals tha refuse to give up the pace of gains.

In just under two days’ time, the next automated readjustment will add an estimated 2.5% to Bitcoin’s difficulty, marking a fourth consecutive increase.

As Cointelegraph reported last week, this will be the first such occurrence since February, the period in which Bitcoin cracked $50,000 for the first time.

An essential indicator of miner activity and arguably Bitcoin’s most important feature, difficulty adjustments show no sign of a let-up in an astonishing return to form, which set in following the Chinese miner rout in May.

Alongside, the hash rate also continues to rebound, passing 130 exahashes per second (EH/s) this weekend and now just 37 EH/s below its all-time highs.

Fresh entry of hardware from relocating and newly active miners has given the hash rate a major boost — at its lows, the metric was at around half of its 2021 peak.

Stock-To-Flow Points To $100,000 By Christmas

A new month calls for a new update of one of Bitcoin’s most accurate price prediction models — the stock-to-flow (S2F) family.

Despite BTC/USD remaining well below the model’s technical day-by-day target, its creator, PlanB, exactly called August’s monthly close of $47,000.

With September due for a minimum close of $43,000, the analyst confirmed that a $100,000 average price later this year was still easily feasible.

“Baseline S2F forecast of $100K by Christmas still stands (or more precise: $100K average for this halving period 2020–2024),” he tweeted Sunday alongside a chart.

“On-chain (non-S2F) indicator shows no sign of a top yet (no red dots). This is in line with S2F forecast.”

With that, Bitcoin has entered the “orange” phase of the model last seen in an upward price surge in the second half of 2017. BTC price action, PlanB stated, is thus acting “like clockwork.”

“I think we go much higher than $100,000,” he added on the prognosis for the current halving cycle, which ends in 2024.

Extreme Greed Is Back

Those concerned about a Bitcoin price rally biting off more than it can chew may yet be proven right.

According to sentiment gauge the Crypto Fear & Greed Index, traders are already back in the “extreme greed” mindset.

With a score of 79/100, Fear & Greed is thus just 16 points away from its historical top zone, an area that has sparked corrective moves in the past.

In order to avoid hitting it too soon, BTC price gains need to be slow and steady, and an impulse move could therefore still prove to be unsustainable.

The Index nonetheless saw 79 in August as well and has remained between 70 and 80 for the past four weeks.

Funding rates contribute to the sense of expectation with rates much lower than when BTC first breached $50,000 early this year with considerably less euphoria than in April.

In other words, traders are much more cautious this time around, if not leaning bearish as the price tries to reclaim the $50,000 level. However, this may actually boost the chances of a short-squeeze and more upside for the price of Bitcoin in the coming days.

Updated: 9-6-2021

Biggest Test In Bitcoin’s 12-Year History Has A Rocky Start

El Salvador’s experiment using Bitcoin had a rocky start as its price crashed on its first day as legal tender, while the roll-out was hampered by technical glitches.

The cryptocurrency plunged as much as 17% to its lowest level in a month amid news that the government disconnected its Bitcoin wallet early on Tuesday to fix problems.

By late morning, the issues appeared to have been overcome, and President Nayib Bukele tweeted that the app was again available for download.

The largest cryptocurrency fell as low as $43,050 in New York Tuesday, before paring losses. Bukele said his country had taken advantage of the crash to “buy the dip”, adding 150 coins to take its total holding to 550, worth about $26 million.

The Bloomberg Galaxy Crypto Index, which tracks some of the largest cryptos, lost as much as 19%, while other smaller digital assets also sold off.

El Salvador’s plan represents the biggest test for Bitcoin in its 12-year history. Both enthusiasts and detractors of cryptocurrencies are monitoring the experiment to see if a significant number of people want to transact with Bitcoin when it circulates alongside the U.S. dollar, and whether it brings any benefits to the violent, impoverished Central American nation.

If the experiment is a success, other countries may follow El Salvador’s lead. Its adoption will get an initial boost from the government’s Bitcoin wallet Chivo, which comes pre-loaded with $30 worth of the currency for users who register with a Salvadoran national ID number.

Businesses will be required to accept Bitcoin in exchange for goods and services and the government will accept it for tax payments. The plan is the brainchild of El Salvador’s 40-year old president, who says it will draw more people into the financial system and make it cheaper to send remittances.

“This is brave new world stuff,” said Garrick Hileman, head of research for the London and Miami-based Blockchain.com. “We are in unchartered waters with this launch, but I’m glad to see this experiment happen overall, and I think we’ll learn a lot from it.”

Updated: 9-6-2021

El Salvador Purchases First 200 BTC, President Bukele Confirms

El Salvador is the first country in the world to recognize Bitcoin as legal tender. Despite opposition from local groups, the government believes cryptocurrency will be a net positive for the economy and society.

El Salvador President Nayib Bukele confirmed Monday that his government has purchased its first 200 Bitcoin (BTC) ahead of the Tuesday rollout of a new law set to make the cryptocurrency legal tender.

“Our brokers will be buying a lot more as the deadline approaches,” Bukele said, referring to the Tuesday, Sept. 7, timetable for fully implementing the new BTC legislation.

El Salvador has just bought it’s first 200 coins.

Our brokers will be buying a lot more as the deadline approaches.#BitcoinDay #BTC

— Nayib Bukele (@nayibbukele) September 6, 2021

The purchase is part of a new $150-million Bitcoin fund passed last week by El Salvador’s Congress. The fund will be used to facilitate conversions from BTC to United States dollars in the lead-up to the new law being implemented. At current prices, the BTC purchase was worth just over $10.36 million.

In June of this year, El Salvador became the first country in the world to recognize Bitcoin as legal tender. Although the decision was met with praise by the Bitcoin community, detractors from the World Bank and International Monetary Fund warned that the new strategy isn’t a good idea. More recently, internal opposition saw hundreds across the country protest against the new Bitcoin Law.

Meanwhile, Bank of America recently outlined at least four potential benefits to El Salvador accepting Bitcoin. In a report published in July, the bank said the country’s adoption of BTC could streamline remittances, promote financial digitization, provide greater consumer choice, and open the country to foreign investors.

The new Bitcoin Law gives Salvadorans the ability to hold the digital asset as part of a long-term investment strategy or withdraw it in cash at any of the 200 ATMs installed across the country. The country is also building infrastructure to support a state-issued Bitcoin wallet, dubbed Chivo. The Chivo wallet will have its own ATM that allows citizens to withdraw cash 24 hours a day without paying commissions.

Updated: 9-7-2021

McDonald’s Now Accepts Bitcoin, But Only In El Salvador

Bitcoin-as-a-payment is becoming reality in El Salvador after the country formally recognized the cryptocurrency as legal tender.

El Salvador’s recognition of Bitcoin (BTC) as legal tender has opened up new payment options for its citizens, with fast-food empire McDonald’s reportedly accepting payments in the cryptocurrency through Lightning Network.

Journalist Aaron van Wirdum broke the news Tuesday after he visited a McDonald’s restaurant in El Salvador, where he was presented with a printed QR code directing him to an invoice page on Lightning Network. McDonald’s had 19 locations across the Latin American country as of 2019.

Just walked into a McDonald’s in San Salvador to see if I could pay for my breakfast with bitcoin, tbh fully expecting to be told no.

But low and behold, they printed a ticket with QR that took me to a webpage with Lightning invoice, and now I’m enjoying my desayuno traditional! pic.twitter.com/NYCkMNbv7U

— Aaron van Wirdum (@AaronvanW) September 7, 2021

Lightning is a layer-two payment protocol designed to make BTC transactions more scalable. Although Bitcoin has succeeded as an investable asset, its adoption as a medium of exchange has been limited. Bitcoin payments were at the core of Satoshi Nakamoto’s 2008 whitepaper describing BTC as electronic cash. (Interestingly, Nakamoto’s forum posts and correspondences used “cash” and “gold” synonymously.)

Lightning Network will likely prove invaluable if El Salvador hopes to achieve the mass adoption of Bitcoin payments. Beyond immediate transactions, however, El Salvador’s Bitcoin gambit could prove successful by streamlining global remittances, increasing the wealth of its citizens and attracting crypto-focused entrepreneurs to the country.

El Salvador’s Bitcoin Law officially came into effect on Tuesday, proving to be a classic “buy the rumor, sell the fact” event for markets. Peak to trough, the BTC price crashed 19% between Monday and Tuesday, reaching a low of $42,900.

President Nayib Bukele confirmed Monday that his government had purchased its first Bitcoin. As of Tuesday, the country held 550 BTC in its reserves.

Bitcoin ATMs

Bukele’s administration has installed 200 Bitcoin ATMs around the country that can be used to exchange the cryptocurrency for U.S. dollars. The Finance Ministry created a $150 million fund at state-run bank Banco de Desarrollo de la Republica de El Salvador, Bandesal, to back the transactions.

Twitter users on Tuesday reported being able to pay for services such as breakfast at McDonald’s with Bitcoin. Still, the dollar will remain the national currency for public accounting purposes and merchants who are technologically unable to receive the e-currency will be exempt from the law, the government has said.

El Salvador’s dollarized economy is heavily reliant on remittances sent home by migrants overseas, which totaled $6 billion last year and account for roughly a fifth of gross domestic product. Bukele says Bitcoin could save Salvadorans $400 million a year in fees for these transactions.

Public Skepticism

While Bukele himself enjoys approval ratings of more than 80%, a poll last week by El Salvador’s Universidad Centroamericana Jose Simeon Canas found his Bitcoin law is widely unpopular. Two-thirds of respondents said the law should be repealed while more than 70% said they prefer to use U.S. dollars instead.

The International Monetary Fund warned of the risks of using Bitcoin, which lost nearly half its value from April to May, and the World Bank declined a request from El Salvador’s government to help the government adopt it, citing environmental and transparency drawbacks. The Bitcoin news also helped trigger a selloff of El Salvador’s dollar bonds, though they have since pared losses.

“Crypto is sexy but untested and complicated especially for a country like El Salvador,” Stifel Nicolaus & Co. managing director Nathalie Marshik said. “It’s extremely risky, and there is the question of, is the Bandesal fund big enough? The regulations look like the law, put together really quickly. It’s a big question mark.”

Watching Closely

While the Bahamas launched its own central bank-backed digital currency this year, the Sand Dollar, and Venezuela has its own e-money called the Petro, these are very different from a decentralized cryptocurrency such as Bitcoin, whose users value its independence from governments and central banks.

Other governments in the region will be watching closely. Last month, Cuba moved to legalize cryptocurrency already being used on the island, while lawmakers in other countries such as Panama and Uruguay have proposed similar legislation.

Salvadoran bonds were the worst performers in emerging markets Tuesday, according to data collected by Bloomberg, after the country’s top court ruled last week that the president can run for a second term. The U.S. criticized the decision and said it damages bilateral relations between the two nations. Debt due in 2041 fell as much as 5%, the most in four months, to trade at 86.6 cents on the dollar.

Updated: 9-7-2021

El Salvador Becomes First Country To Adopt Bitcoin As National Currency

The government is rolling out bitcoin ATMs, an e-wallet and stylish kiosks, but the launch had hiccups.

Tiny and impoverished El Salvador’s move to become the first country in the world to adopt bitcoin as legal tender got off to a bumpy start, as the government took its bitcoin e-wallet offline for several hours after tens of thousands of people tried to download the app, overloading servers.

The administration of President Nayib Bukele, 40, plans to spend more than $225 million on the rollout, including a $30 credit in bitcoin to those who take up Chivo—local slang for “cool”—the government-run e-wallet that can be used for purchases in bitcoin or U.S. dollars.

But the Chivo wallet didn’t show up on major app stores early Tuesday. Some users said on social media that they weren’t able to sign up with their phone numbers or official IDs.

Bitcoin enthusiasts around the world showed their support for El Salvador on Tuesday by each buying $30 of bitcoin. Still, bitcoin was at $46776.65 as of 5 p.m. Eastern time Tuesday, down 9.9%.

The crypto asset has proven to be much more volatile than traditional currencies, as it lacks economic fundamentals to support its value and trades entirely on sentiment.

Mr. Bukele said the government took advantage of the drop to buy 150 bitcoin. El Salvador now holds 550 bitcoin, Mr. Bukele wrote on Twitter, most of it purchased since Monday.

Crypto enthusiasts called Tuesday B-Day, or Bitcoin Day, “because we are very eager to see how the ecosystem develops,” said José Luis Guillén, founder of Coincaex, a Central American foreign-exchange platform to buy and sell bitcoin or U.S. dollars. Coincaex aims to be among the first foreign bitcoin service providers to get a license from the central bank.

Bitcoin’s adoption will be closely monitored by crypto advocates, global financial institutions and governments around the world.

“It’s a pretty monumental step in the evolution of bitcoin,” said Garrick Hileman, head of research at Blockchain.com, one of the world’s largest cryptocurrency transactions firms.

The government is also rolling out a network of 200 bitcoin ATMs and building a chain of stylish, Chivo-brand kiosks with staff who will introduce consumers to bitcoin at plazas around the country.

There was little activity at the Chivo kiosk in the busy Antiguo Cuscatlán square in the country’s capital on Tuesday. Some residents inquired about the wallet as a team of young Salvadorans in charge of promoting the state-run app stared at their cellphones to check on the status of the rollout.

“There are always glitches, but these problems don’t mean anything,” said Luis Alemán, a 61-year-old resident who plans to use the Chivo wallet to receive remittances from his children living in the U.S. and save on fees charged by financial-service companies.

“One more day of waiting doesn’t affect me,” he said.

Many Salvadorans also took to social media to show images of fast-food chains such as McDonald’s and Pizza Hut accepting bitcoin as payment.

The stakes are high for the indebted Central American country of 6.5 million. Economists say that bitcoin’s sharp fluctuations risk denting the tax revenue and foreign currency reserves of a government that has neither the policy tools nor the financial firepower to contain a speculative attack.

“The government is betting more than $200 million in a virtual casino, and that’s taxpayer money,” said Ricardo Castañeda, senior economist at the Central American Institute for Fiscal Studies, a think tank.

The Bukele administration has also shrugged off warnings from creditors such as the International Monetary Fund, which advised against the adoption of privately issued tokens that bypass authorities and open doors to illicit transactions.

Government officials say bitcoin’s adoption will lead to affordable financial services in a country where an estimated 70% of the workforce operates in a vast underground, cash-based economy.

Many business owners like the government’s initiative because it widens payment options for clients with an easy-to-use mobile app that eliminates costs such as the credit-card fees that banks charge to merchants.

“My mother believes that bitcoin is a thing of the devil, but bitcoin has a lot of advantages,” said Fernando Alvarenga, whose family-owned business manufactures metal bed frames and industrial griddles for making pupusas, El Salvador’s popular thick corn tortillas. Mr. Alvarenga sees the use of bitcoin as another step toward financial innovation and diversification following the country’s adoption of the U.S. dollar as national currency in 2001.

The bitcoin plan took Salvadorans by surprise when it was first unveiled in June. U.S. crypto entrepreneur Jack Mallers, wearing a baggy hoodie and baseball cap, presented the initiative at a conference in Miami under the title: “One Small Step for bitcoin, One Giant Leap for Mankind.”

Mr. Mallers opened the floor to a video recording in English by Mr. Bukele, a businessman known for his leather jackets and baseball caps who was elected in 2019 as a political outsider by voters tired of rampant violence and poverty.

“Great ideas are beautiful and have great power,” Mr. Bukele said. An ecstatic crowd stood and applauded as Mr. Bukele announced he would send a bill to the National Assembly to make bitcoin legal tender in El Salvador. The three-page bill was summarily passed a few days later.

Jorge Hasbún, who owns clothing stores and heads El Salvador’s Chamber of Commerce and Industry, said he was startled when he heard about the announcement. The initiative was rushed through without consulting stakeholders or the private sector, and regulations that were disclosed at the last minute have been insufficient, he added.

“If a client comes to pay with bitcoin, I’m not ready,” Mr. Hasbún said. “We could have ridden the wave in a positive way, but the way the law was imposed wasn’t positive.”

Some Salvadorans got their first taste of bitcoin several years ago in El Zonte, a fishing village on the Pacific coast that became a magnet for foreign surfers because of its steady stream of waves.

Its 3,600 residents began to embrace bitcoin in 2018 with the support of U.S. donors through the development of Bitcoin Beach, a local e-wallet that now has 35,000 users across the country. Hope House, a local charity group, began to use the cryptocurrency to pay for social endeavors such as school tutoring and beach-lifeguard employment programs.

Once word got out, the use of bitcoin spread through town from mom-and-pop stores to slick espresso bars, said Jorge Valenzuela, one of Hope House’s founders.

“We have changed the narrative about El Salvador, from being a dangerous country to a nation of crypto assets,” he said.

The official use of bitcoin comes as Mr. Bukele faces increasing economic headwinds, a widening budget gap and limited access to debt markets. Diplomatic ties with the Biden administration have been strained as international organizations have accused Mr. Bukele of taking authoritarian control of the country.

Mr. Bukele’s ruling party legislators fired all members of the country’s top court in May. The newly appointed judges ruled late Friday that the president can serve two consecutive terms, allowing Mr. Bukele to stand for reelection. The U.S. Embassy in El Salvador said the ruling violated the country’s constitutional ban on immediate reelection.

Although Mr. Bukele has one of the highest approval ratings among Latin American presidents, his bitcoin initiative is highly unpopular. More than 65% of Salvadorans don’t want the government to spend taxpayer money on its adoption, and 80% have little or no confidence in bitcoin, according to a poll released by El Salvador’s Universidad Centroamericana José Simeón Cañas earlier this month.

El Salvador’s International Truckers Association said in August that mandating businesses to accept bitcoin curtailed economic freedom.

In a sign of how the bitcoin issue has made for strange bedfellows, hundreds of veterans of the country’s civil war—retired soldiers and former guerrilla fighters from the conflict that left more than 75,000 people dead in the 1980s—demonstrated together last month in front of El Salvador’s Finance Ministry to demand pension benefits and assurances that payments won’t be denominated in bitcoin.

“Bitcoin is for countries with more advanced technology and stronger economies,” said José Alberto Amaya, a 56-year-old who served in the Army’s special forces and rapid reaction brigades.

“It’s a wild economic adventure,” said Juan Manuel Pineda, a former Marxist guerrilla who served as an explosives expert in the Farabundo Martí National Liberation Front. “How are we going to use bitcoin if we don’t even have a smartphone or the money to have internet access?”

Even some crypto advocates are reluctant to use the state-run Chivo e-wallet because of privacy concerns.

“You hand over all your data to the government, your financial movements, what goes out and what goes in,” said Oswaldo Serrano, owner of Smart Pet SV, an online pet-food delivery service. “But I do hope that people spend those $30 given by the government on pet food.”

There are security risks because the funds held in the Chivo wallet are controlled by the government on behalf of its citizens. Such fund centralization risks attracting hackers, notes Mr. Hileman of Blockchain.com.

Financial service companies, which are the main channel for the $6 billion in remittances that El Salvador receives each year from migrants living in the U.S., will accept payments in bitcoin, but the funds will be immediately converted into dollars.

Their top concern will be how to prevent federally regulated banks in the U.S., which provide financial services to banks in El Salvador, from cutting ties because of due diligence and compliance risks, executives say.

“Because El Salvador will have two currencies, the question becomes, will the bitcoin ecosystem get its U.S. dollars through El Salvador and will the U.S. be OK with that?” said Caitlin Long, chief executive officer of Avanti Bank, which provides cryptocurrency services for institutional investors.

Bitso To Assist The Launch Of El Salvador’s Official Bitcoin Wallet Chivo

Mexican crypto exchange Bitso is announced as a core partner for El Salvador’s state-issued BTC wallet.

Bitso, a major cryptocurrency exchange in Latin America, will be the core crypto service provider for El Salvador’s official Bitcoin (BTC) wallet, known as Chivo.

In conjunction with Bitcoin becoming legal tender in El Salvador, Bitso announced on Sept. 7 that the firm would assist El Salvador in launching the state-supported BTC wallet alongside companies like Silvergate Bank, digital currency company Athena Bitcoin and blockchain firm Algorand.

Silvergate Bank, a California state-chartered commercial bank and a United States Federal Reserve member, will work with Bitso to facilitate U.S. dollar transactions for the Chivo wallet. Athena Bitcoin will provide some front-end services and Chivo’s ATM-related operations, while Algorand will act as the official blockchain provider.

Launched Tuesday, the state-issued Chivo wallet is designed to enable individuals and businesses to send payments in Bitcoin or dollars from anywhere in the world. The wallet is available on Android and iOS, allowing users to automatically convert Bitcoin transactions into dollars or keep their Bitcoin holdings and later withdraw them in cash from 200 Bitcoin ATMs installed across the country.

A spokesperson for Bitso told Cointelegraph that Chivo users will not have to pay fees related to the network, noting that “none of the withdrawals, deposits or other transactions” made with the Chivo app would generate fees for users, elaborating:

“The Salvadoran government has created strategic partnerships to ensure that convertibility is undergone at the most competitive prices possible, and users will not have to be faced with covering any costs.”

“The use of the Chivo wallet is completely optional, and those without citizenship will be able to access the app as well,” Bitso noted in the announcement.

Santiago Alvarado, vice president of Bitso for business, expressed confidence that El Salvador’s Bitcoin acceptance will have a “positive impact on the lives of millions of Salvadorans.”

“Over the last seven years, we have worked tirelessly to identify the best approach to make Bitcoin accessible to more than 2.75 million customers across Mexico, Argentina and Brazil. Today, as the leading crypto-service provider for El Salvador’s wallet, we are committed to making crypto useful for Salvadorans,” Alvarado added.

Following the Chivo wallet launch, Salvadoran President Nayib Bukele reported that temporary capacity errors on the platform were causing app installation issues. Bukele said that Chivo will temporarily disconnect its systems to fix the issue. The president also noted that Chivo would be available for Salvadorans in the U.S. and “almost every country in the world.”

Founded in 2014, Bitso is a major cryptocurrency platform in Latin America, backed by large crypto companies like U.S. crypto exchange Coinbase and Ripple. The exchange saw its user base almost tripling from 1 million in July 2020 to nearly 3 million users by September 2021. In late August, the company hired Facebook veteran Vaughan Smith as the chief operating officer, following a $250 million capital raise earlier this year.

President Bukele announced legislation to accept Bitcoin as legal tender alongside the U.S. dollar in early June, aiming to bank the unbanked population by using the digital currency as 70% of Salvadorans lack access to basic financial services. The bill subsequently passed the nation’s Legislative Assembly and was scheduled to be enforced on Sept. 7.

Many people in El Salvador have opposed the government’s plans to adopt Bitcoin as legal tender, citing volatility and security concerns, spurring several protests. According to El Salvador’s Central American University’s Institute of Public Opinion survey, 70% of Salvadorans believe that Bukele’s Bitcoin law — which recognizes the cryptocurrency as legal tender — should be repealed. Over 90% of survey respondents also said they have a poor understanding of cryptocurrency.

Sept. 7 Is ‘Bitcoin Day’ In El Salvador As BTC Becomes Legal Tender

El Salvador’s Bitcoin Day is marred by operational headaches as the state’s BTC wallet servers go offline.

It is Sept. 7, and El Salvador’s Bitcoin Law has officially come into effect three months after its parliament passed the historic vote. The Central American nation is now the first country to recognize Bitcoin (BTC) as legal tender.

Tweeting earlier in the day, El Salvador President Nayib Bukele remarked “3 minutos para hacer historia — In 3 minutes, we make history.”

However, day one of El Salvador’s Bitcoin experiment has been somewhat marred by server capacity errors suffered by the state-issued Chivo wallet. Addressing the situation, President Bukele remarked:

“For a few moments it won’t work @chivowallet, we have disconnected it while increasing the capacity of the image capture servers. The installation problems that some people had were for that reason. We prefer to correct it before reconnecting it.”

As previously reported by Cointelegraph, El Salvador has purchased 200 BTC, taking its Bitcoin holdings to 400 “coins.” The country’s parliament recently passed a $150-million Bitcoin fund to facilitate conversions from BTC to United States dollars.

Thus, more bulk Bitcoin purchases are expected, with the president even signaling intentions to ramp up the country’s BTC acquisition.

Since the vote in June, the Central American nation has enjoyed significant support from the Bitcoin community. Tuesday’s launch is expected to be commemorated with a solidarity $30 BTC purchase from several Bitcoin proponents in Latin America and worldwide.

Bitcoin personalities such as MicroStrategy CEO Michael Saylor and Human Rights Foundation chief strategy officer Alex Gladstein have thrown their weight behind the plan.

Konstantin Anissimov, executive director of crypto exchange CEX.IO, told Cointelegraph that El Salvador’s Bitcoin adoption validates BTC as a currency. According to Anissimov, Bitcoin offers significant financial help for countries with weak economies like El Salvador.

“The big advantage Bitcoin will have for these economies is that they will not have any debt to pay to anyone. It also means that these countries will offer excellent opportunities for the adoption of cryptocurrencies and for crypto startups. This will eventually boost taxation and can become a growth point for this country.”

El Salvador’s Bitcoin adoption push has been met with excitement and hostility from within and outside the country. Back in August, some retirees protested the Bitcoin Law, fearful of the government paying their pensions in BTC instead of the U.S. dollar.

As many as 70% of the country’s population is reportedly against the adoption of Bitcoin as legal tender. Global financial entities such as the International Monetary Fund have also warned El Salvador against using BTC as legal tender.

Speaking to Bloomberg on Tuesday, Mark Mobius of Mobius Capital Partners panned El Salvador’s Bitcoin adoption plan, stating that the country was “grasping at straws.”

Bitcoin Nurses Losses In Wake of El Salvador’s Glitched Rollout

Bitcoin nursed losses Wednesday after plunging amid El Salvador’s troubled rollout of the largest cryptocurrency as legal tender.

The virtual coin was trading at about $47,100 as of 11 a.m. in Singapore, having slid as much as 17% a day earlier before paring some of the losses. The downdraft also swept across tokens such as Ether and Dogecoin, as well as the Bloomberg Galaxy Crypto Index.

“Social media platforms were very cautious over the weekend that a plunge could occur following El Salvador’s big day,” Edward Moya, senior market analyst at Oanda Corp., wrote in a note. Some investors likely bought in anticipation of the nation implementing its Bitcoin law Sept. 7 and then moved to “sell the fact,” he said.

El Salvador’s experiment with Bitcoin — the biggest test of the token’s real-world usefulness — had a rocky start because of technical glitches to the official digital wallet that later appeared to be resolved. President Nayib Bukele said on Twitter the country now holds 550 Bitcoins after buying when the price fell.

Tuesday’s selloff is the most significant break in a rebound that had lifted Bitcoin almost 75% since late July. Overall cryptocurrency market value fell about $280 billion in the past 24 hours, according to tracker CoinGecko.

Some $3.7 billion of cryptocurrency liquidations occurred over the same period, according to Bybt.com. These happen when leveraged positions are closed by exchanges for failing to meet margin requirements.

Billionaire Mike Novogratz, chief executive officer of Galaxy Digital Holdings and a long-time cryptocurrency bull, said the market for digital coins was running strong over the last eight weeks and became overbought. Interest from individual investors spiked on the back of large institutions jumping on board the cryptocurrency wagon, he said.

Oanda’s Moya argued that Bitcoin’s “fundamentals remain intact, as prices iron out a new trading range between the $46,000 and $53,000 levels.”

While the El Salvador rollout may have been a proximal cause of the swings in Bitcoin, other variables could also be at play in the famously volatile cryptocurrency sector. In particular, the prospect of reduced Federal Reserve stimulus is a challenge for speculative assets like digital tokens.

“Could it also be that the liquidity beneficiaries — which could include crypto — may be sensing more normalized future policy setting from major central banks,” Chris Weston, head of research at Pepperstone Financial Pty, wrote in a note.

Stocks in Asia tied to cryptocurrencies, such as Japan’s Monex Group, retreated. North American peers like Riot Blockchain Inc., Marathon Digital Holdings Inc., Coinbase Global Inc. and MicroStrategy Inc. also tumbled.

Updated: 9-8-2021

El Salvador Reportedly Fixes Crypto Wallet After Bumpy Bitcoin Rollout

Chivo Bitcoin wallet was taken down for five hours for maintenance after users reported various issues with the application.

El Salvador’s Bitcoin (BTC) adoption drive met its first roadblock after citizens reported problems downloading and operating the state-run Chivo wallet.

While the wallet was taken down soon after it went live, Salvadoran President Nayib Bukele later announced that all the issues related to the BTC wallet have been fixed. He tweeted:

“We have finished today’s maintenance of Chivo wallet. Report any malfunction here, in the comments.”

Soon after El Salvador’s implementation of the Bitcoin Law, Chivo wallet was reportedly launched on major app stores, including Google Play, Huawei AppGallery and Apple App Store.

After numerous user reports of system downtime and download issues, Bukele announced a maintenance period to improve the user experience and fix reported problems:

“We will disconnect the system from 1am to 6am to make these adjustments. Our teams are ready. We hope tomorrow is much better.”

Currently, the Chivo wallet in the Google Play store will only be supported for the Samsung Galaxy S20 and Samsung Galaxy S21.

While the service has resumed, Salvadoran authorities have requested citizens to report Chivo-related technical issues that will be addressed to “improve everyone’s experience.”

As Bitcoin’s status as legal tender in El Salvador is now official, the legal counsel to the president, Javier Argueta, has announced a mandate for local businesses to accept BTC.

Businesses still reserve the right to choose between BTC and the United States dollar for final payouts. The Chivo wallet has an option for merchants to convert their Bitcoin income into dollars automatically.

American fast-food giant McDonald’s has also started accepting Bitcoin payments in the country.

El Salvador Says Merchants Must Process BTC Transactions — Or They May Face Action

A Salvadoran government official has said that while businesses must accept BTC transactions, they can choose whether to receive BTC or USD upon settling transactions.

In an interview with local media, Javier Argueta, the legal counsel to the Presidential House of El Salvador, clarified the obligations of businesses the day before the country’s controversial Bitcoin Law recognizing Bitcoin as legal tender took effect.

The legal counsel to the president of El Salvador has stated that businesses are mandated to accept Bitcoin (BTC) from customers — but they are able to choose whether or not they will receive BTC or United States dollars once the transaction is settled.

According to a rough translation, Argueta emphasized that it is mandatory for businesses “to have the electronic wallet” to receive Bitcoin, however, “in the transaction […] you have the will to receive Bitcoin or dollars, that is why it is voluntary.”

“If I buy you 1,000 shirts that cost $200 and I’m going to pay you in Bitcoin, you have the wallet, but in the transaction, when you do it, you have the will to receive Bitcoin or dollars, that is why it is voluntary.”

The official added that businesses that refuse to accept BTC will be operating in violation of local regulations. ElSalvador.com’s story states, “According to Argueta, all businesses are obliged to make the transaction in Bitcoin and despite the fact that neither the law nor the regulations clearly state it, if the business does not accept it, it is exposed to referrals of infractions to the Consumer Protection Law.”

#ElSalvador | Según Javier Argueta, asesor jurídico de Capres, todos los empresarios que no hagan uso de la billetera Chivo y se nieguen a hacer la transacción con #Bitcoin se enfrentan a legislaciones como Ley de protección de consumidor; se harán remisiones.

— elsalvador.com (@elsalvadorcom) September 6, 2021

The government’s Chivo wallet allows users to process transfers in both BTC and U.S. dollars. The wallet is maintained in partnership with Mexican crypto exchange Bitso, which says it is working with California-based crypto-friendly bank Silvergate to facilitate transactions denominated in USD.

The app also allows merchants to automatically convert the Bitcoin they receive into dollars.

The clarification comes as local businesses are pushing back against language contained in the Bitcoin Law that states merchants “must” accept Bitcoin as a means of payment, with representatives of the private sector pushing for the legislation to be reworded.

Updated: 9-9-2021

El Salvador Adoption A ‘Coming Of Age’ For Bitcoin, Says Fidelity Exec

Fidelity’s Jurrien Timmer believes that the significance of El Salvador’s Bitcoin move is “a little bit overplayed.”

El Salvador’s adoption of Bitcoin (BTC) as legal tender has been widely celebrated across the crypto ecosystem, but one expert believes the importance of the rollout was a little bit exaggerated.

Speaking to CNBC, Fidelity Investments director Jurrien Timmer said that the significance of El Salvador’s Bitcoin move is “a little bit overplayed.”

“Because it’s not like El Salvador has dropped the U.S. dollar as its peg,” Timmer explained. “It’s not like it switched from dollars as its currency peg to Bitcoin.”

Reminding that the country still has the United States dollar and people can decide to be paid in dollars or pay in dollars, he added that the adoption is on a voluntary basis. However, while paying in Bitcoin is voluntary in El Salvador, local merchants in the country are mandated to accept and process BTC transactions.

Timmer noted that Bitcoin is being tested, for the first time, as a medium of exchange as opposed to a store of value. Listing its scarcity and its powerful network as the core values of Bitcoin, he stressed that the proof-of-work makes Bitcoin, by definition, less scalable than other cryptocurrencies like Ether (ETH).

The Fidelity executive compared Bitcoin’s current moment to an “adolescent’s coming of age” like gold was in the 1960s:

“Although it’s in reverse, because gold went from being money to being an asset class in the ’70s. Bitcoin is kind of going from being an asset class to also being a currency or being money.”

As Cointelegraph reported, El Salvador made history on Tuesday, Sept. 7, by making Bitcoin legal tender. The government also provided a state-issued wallet named Chivo.

Updated: 9-10-2021

El Salvador’s Bonds Suffer As Bitcoin Law Takes Effect

Bond investors appear to be betting against El Salvador’s controversial Bitcoin Law, but other factors need to be taken into account.

El Salvador’s move to embrace Bitcoin has ruffled the feathers of bond investors, with yields spiking as investors signal uncertainty for the emerging economy.

A Wednesday report published by Bloomberg notes that recently, the yield curve on El Salvador’s bonds has inverted, meaning bonds with short-term maturities are now yielding more than is due from the instruments. It stated:

“That’s generally considered a bad sign as it means investors see shorter-term debt as riskier, and most yield curves will slope upwards given the inherent uncertainty of pricing things over the longer-term.”

Ben Emons of Medley Global Advisors emphasized that El Salvador’s bonds lost significant ground “on the first day of its new Bitcoin Law,” describing the market action as “an unwelcome sign that the wide use of Bitcoin may have major implications” for the emerging country.

Emons doesn’t appear to be alone in his assessment, with Bloomberg’s data showing that El Salvador’s bonds began moving toward inversion in June — the same month during which the country’s parliament passed President Nayib Bukele’s controversial Bitcoin Law, recognizing BTC as legal tender.

However, El Salvador’s move to recognize Bitcoin as legal tender is not the sole force exerting bearish pressure on the country’s bond market.

Other pundits have emphasized Bukele’s sudden ousting of the country’s constitutional tribunal in May as a major source of negative sentiment regarding El Salvador’s economic outlook, with Bukele having fired the country’s attorney general and top judges.

Since May, the spread between El Salvador’s government bonds and comparable United States Treasuries had widened by 77% as of August 12. Bukele’s inability to secure a deal with the International Monetary Fund has also impacted the outlook of El Salvador’s bond market.

While El Salvador’s Bitcoin Law took effect on Tuesday, the rollout for the government-issued “Chivo” digital wallet saw widespread complaints about technical issues from citizens.

Updated: 9-11-2021

El Salvador’s Bitcoin Detractors: Opposition Groups Gather As Crypto Law Rolls Out

Some are resisting El Salvador’s move to make Bitcoin a legal tender, sighting lack of education and volatility of BTC.

The year 2021 will probably go down the history books as one of Bitcoin’s (BTC) most interesting years, given its recent uptake by billionaires and adoption by mainstream institutions, not to mention El Salvador’s move to make it legal tender.

In El Salvador’s case, it almost seems as if the whole world is watching this experiment to see whether it will be a success or a total failure for the Central American nation.

With Sept. 7 marking the official implementation of Bitcoin as a legal tender in El Salvador, a wave of protests in the country against the move has roused suspicions and uncertainty over how the new law will be enforced.

From the arrest of individuals criticizing the Salvadoran government over the new law, to the wave of citizens across the country protesting Bitcoin’s legal status, the seminal crypto is facing some headwinds.

How Bitcoin Became Legal Tender

It all began in early June after Salvadoran president Nayib Bukele announced in a tweet that the country’s legislative assembly had passed a bill making Bitcoin legal tender. The law was set to be implemented on Sept. 7 and would see the country’s 4.5 million citizens able to make purchases with Bitcoin at stores nationwide.

In his announcement, Bukele said that once an official bill to make Bitcoin legal tender was passed, “Chivo ATMs” — Chivo being the name of the official BTC wallet for El Salvador — would eventually be “everywhere” in the country. This would allow El Salvadorans to withdraw Bitcoin in cash without incurring any commissions on their holdings, as is the case with services such as Western Union.

Moreover, Bukele assured citizens that no one will be forced to use Bitcoin. In a statement, the 40-year-old president said that “someone can always queue up at Western Union and pay a commission.”

“What if someone doesn’t want to use Bitcoin? [Well] don’t download the app and continue living your normal life. Nobody is going to take your dollars,” he said.

The First Wave Of Resistance

Following the announcement, a group of protestors called the Popular Resistance and Rebellion Block (BRRP) block emerged to protest against the Bitcoin law.

“President Nayib Bukele passed the law making the cryptocurrency legal tender in the country without proper consultations with the people,” one activist said.

Although the protest group highlighted complexities such as Bitcoin’s volatility as reasons for caution, their main claim is that the law mainly serves large businesses linked to alleged money laundering to the benefit of corrupt officials.

“Bitcoin only serves some large businessmen, especially those linked to the government, to launder ill-gotten money,” one protestor said.

A letter from the BRRP group said that “entrepreneurs who put their capital in Bitcoin will not pay taxes on their earnings and the government would spend millions worth of taxes to execute the whole campaign.”

Indeed, the bill to make Bitcoin legal tender includes some interesting proposals such as a zero capital gains tax on BTC. The bill also promised investors permanent residency in the country with a three BTC investment in El Salvador.

The Arrest Of Mario Gómez

As the controversial Bitcoin bill became a law on Sept. 7, both supporters and detractors continue to emerge with the latest in events around the law being the arrest of Mario Gómez.

According to several local news outlets in El Salvador, Mario Gómez — a computer and crypto expert as well as an avid critic of the government — was arrested by local police and held for a few hours before being released.

Gómez has been known to regularly post on social media opposing the government’s move to make Bitcoin legal tender. Observers such as Steve Hanke — an economist from Johns Hopkins University — criticized Gómez’s arrest as an “authoritarian police tactic in action.”

Hector Silva, a counselor of the mayor’s office in San Salvador, said, “the arrest of Mario portrays the fragility of the government in terms of the implementation of the Bitcoin law but confirms something even more dangerous.”

“They are willing to manipulate whatever institutions are necessary to push critical voices out of the way,” added Silva.

Although the police released a statement saying that Gómez was detained as part of a financial fraud investigation, news reports claimed that he was arrested without a warrant and an attempt was made to take possession of his phone and computer.

The Citizens’ Protest

Right before Gómez’s arrest, some retirees in El Salvador took to the streets to protest, worried about the government using the cryptocurrency to pay their pensions.

While speaking to reporters, one demonstrator from the crowd — which included veterans, disability pensioners, workers and retirees — said, “we know this coin fluctuates drastically. Its value changes from one second to another, and we will have no control over it.”

While Bukele has promised that the use of Bitcoin in the country will be optional and that salaries and pensions will still be paid in United States dollars, the protestors still highlighted a lack of knowledge of the technology.

Citizens have also complained that there has been too little explanation from officials about the pros and cons of Bitcoin. “We don’t know the currency. We don’t know where it comes from. We don’t know if it’s going to bring us profit or loss. We don’t know anything,” one Salvadoran added.

In response, Bukele’s administration has stated that the use of Bitcoin is not mandatory and that necessary training and other alternatives to Bitcoin will be provided.

Mixed Opinions

Although President Bukele enjoys incredibly high approval ratings, recent polls concerning the Bitcoin law show a widespread lack of support for the measure. A recent poll conducted by El Salvador’s Universidad Centroamericana José Siméon Cañas shows that up to two-thirds of respondents are inclined toward a move to repeal the law, and more than 70% prefer the U.S dollar over Bitcoin.

International institutions like the International Monetary Fund have also warned about macroeconomic, financial and legal issues brought about by El Salvador’s adoption of Bitcoin.

Siobhan Morden, head of Latin America Fixed Income Strategy at Amherst Pierpont, said that “the plans for Bitcoin under an increasingly autocratic regime will likely only compound concerns about corruption.”

On the flip side, others remain optimistic that the new law will eventually benefit Salvadorans given that the country’s economy is heavily reliant on remittances sent home by migrants overseas. Last year alone, the country’s remittances totaled $6 billion, accounting for a fifth of gross domestic product.

“El Salvador’s adoption of Bitcoin as legal tender by law offers the country some optionality in financial matters and sovereignty,” said Alexander Blum, managing director of Two Prime.

His sentiments were echoed by Alberto Echegaray Guevara — an artist and entrepreneur — who said, “President Bukele’s Bitcoin Law is not only trying to make international money transfer cheaper and easier for 70% of his unbanked population but also creating a new economic hub and new remittances platform in Central America.”

Adrian Pollard from HollaEx told Cointelegraph, “It is typical for new technology rollouts to have bugs and apposition but that’s exactly why it was made voluntary.”

“I suspect there will be more bumps along the road for El Salvador but it will be worth it long term.

In fact, I believe other South American nations aren’t far behind and will follow,” added Pollard.

Updated: 9-13-2021

Bitcoin Investors Are Reportedly Exempt From Taxes In El Salvador

El Salvador is looking to attract foreign investment by adopting major tax breaks on Bitcoin trading.

The government of El Salvador will reportedly exempt investors from paying a capital gains tax and an income tax on Bitcoin (BTC), according to a presidential legal counsel.

Javier Argueta, a legal adviser to President Nayib Bukele, is looking to encourage foreign investment through major tax breaks on Bitcoin, Agence France-Presse reported Sept. 10.

“If a person has assets in Bitcoin and makes high profits, there will be no tax. This is done obviously to encourage foreign investment,” Argueta said, adding that El Salvador will impose no taxes on “either the capital increase or the income.”

Argueta reportedly noted that the Salvadoran government would be actively tracing Bitcoin transactions on El Salvador’s official BTC wallet, Chivo, to combat the potentially illegal use of the cryptocurrency. “We are implementing a series of recommendations from international institutions against money laundering,” he said.

The Chivo wallet would also temporarily halt Bitcoin transactions on the application if Bitcoin value collapsed to minimize the impact of extreme volatility or price fluctuations.

Last Tuesday, El Salvador became the first country in the world to adopt Bitcoin as legal tender, requiring all local merchants to accept BTC as a means of payment.

In cooperation with global companies like Bitso crypto exchange and Silvergate Bank, El Salvador launched the official BTC wallet known as Chivo, allowing users to convert BTC transactions into the United States dollar or withdraw using a special ATM, with no transaction fees.

As previously reported, the Chivo wallet was temporarily taken down for maintenance on the launch day. According to several social media reports, some Chivo wallet users have allegedly been still experiencing major issues with transacting or withdrawing from Chivo after El Salvador fixed the crypto wallet last week.

El Salvador’s Bitcoin Day: The First Of Many Or A One-Off?

Thanks to El Salvador’s daring move, digital money looms large on global policymakers’ radars.

On Sept. 7, in a historic first, the small Central American nation of El Salvador adopted Bitcoin as legal tender.

The true significance of this day for how people all around the world exchange value and what meaning they ascribe to the concept of money will take some time to reify and be fully understood. Yet, what is already clear is that September 2021 will be up there next to January 2009 in the history books of the digitization of finance.

Surrounded by controversy, protests, bumpy infrastructure rollout — how else? — but also the joy and optimism of millions globally who look at this great experiment with hope, the Bitcoin Day marked the first instance of a sovereign state making a decentralized digital asset its national currency. Was it a success, after all?

Politics In The Background

A nation of under 7 million, El Salvador has long waived its claim for monetary sovereignty. In 2001, it ditched the colón, its national currency in use for more than a century, in favor of the United States dollar.

The move made a lot of practical sense since the share of remittances — a good chunk of them coming from U.S.-based Salvadorans — in the country’s gross domestic product exceeded 16% at peak points.

At that time, the move by then-president Francisco Flores Pérez sparked protests and was condemned by detractors who claimed it was undemocratic and allegedly benefitted the bankers and the rich.

Two decades later, President Nayib Bukele — a forty-year-old who rose to power at the helm of a party called New Ideas — added another chapter to El Salvador’s monetary saga — this time, supplementing a foreign currency circulating in the country with one unhemmed by borders.

Much like 20 years ago, there has been backlash concerning the Bitcoin Law. However, the same polls that show a lack of support for Bitcoin (BTC) as a new means of payment suggest that a large share of Salvadorans have a limited understanding of what it is and how it will affect their lives.

Furthermore, in many cases, resentment toward Bitcoin can be linked to resentment toward Bukele, who, despite robust approval ratings, remains a divisive figure whose alleged autocratic tendencies concern some international observers.

In sum, there are good reasons to believe that there is no powerful ideological opposition to the concept of decentralized finance in El Salvador, and whatever pushback currently exists will likely dissipate further down the adoption curve — if implementation proves to be an ultimate success.

Bustle On The Ground

Meanwhile, the somewhat rushed launch of the payments infrastructure was, expectedly, far from seamless. The government-run Chivo wallet went down for several hours, and some retail workers reportedly didn’t know how to process BTC payments. Soon after the launch, the president himself took on the role of customer support, tweeting updates on the state of the wallet service.

Yet overall, according to the accounts of those who were there to witness El Salvador making its first steps as a Bitcoin nation, things started to smoothen soon after a choppy start.

Bart Mol, founder and host of the Satoshi Radio podcast, tweeted along his journey from Chivo ATMs that didn’t work to successfully performing Lightning transactions to pay for pizza and coffee at separate retail locations.

The overall feeling, Mol concluded, was that of “witnessing history.”

International Response

Institutions of the global financial system seem less excited. The International Monetary Fund has been passive-aggressive about El Salvador’s Bitcoin Law since it passed early this summer. Perhaps, if this experiment yields favorable results, the IMF and other global financial bodies will come around?

Some legal professionals are skeptical about this prospect. During a Discord “ask me anything” (AMA) session with Cointelegraph Markets Pro subscribers last week, Cointelegraph general counsel Zachary Kelman opined that global financial institutions are unlikely to ever get on board with Bitcoin as national currency:

“The stated reasons (environment, transparency) for opposing El Salvador’s adoption of BTC are not the real reasons, which is the threat crypto poses to the established global political order and banking system. So, I don’t think these international bodies would ever be widely supportive of Bitcoin.”

Other nation-states, however, are watching closely. Granted, El Salvador’s position as the region’s remittances leader, combined with its earlier experience in outsourcing the national money function to a foreign currency, makes for a rare combination. Most other nations have higher bars to clear even if they could muster political momentum for making a decentralized money legal tender.

Still, the potential favorable effects of El Salvador’s move could nudge other countries to consider Bitcoin as a payment infrastructure more seriously. Amanda Wick, chief of legal affairs at blockchain analytics firm Chainalysis, told Cointelegraph that cryptocurrency is an ideal technology for remittances, and it is thus well-positioned to serve remittance-heavy economies:

“Many citizens [in El Salvador] do not have access to traditional financial services, and this could boost financial inclusion. These driving factors may provide insight into which countries may follow suit. We’ve found in our research that these are already popular use cases in countries across Latin America, Africa and Southeast Asia, in particular.”

The reported acceleration of other countries’ central bank digital currency research programs, the push to define crypto’s legal status in Ukraine, and discussions to make cryptocurrency a legal alternative payment method in Panama can all be seen as carry-over effects of El Salvador’s bold initiative.

Evidently, not every nation-state is in a position to embrace Bitcoin as the national currency. But on Sept. 7, virtually everyone was prompted to reassess where they stand on the digital money map of the world.

Regardless of the outcome of the El Salvador experiment, the pioneering example of the Central American nation has already pushed cryptocurrency deeper into the mainstream political agenda than it could ever get without recognition by a sovereign state.

The Aftermath Of El Salvador’s Pioneering Move, Sept. 6-13

Cointelegraph’s law & policy newsletter is back with a discussion of El Salvador’s effects, Coinbase’s woes, and the digital euro’s prospects.

Too much is happening in the realm of crypto policy and regulation to leave the biggest developments of each week without a roundup and at least some conceptual reflection. Starting today, we are getting back to decoding crypto law and everything around it that is worth decoding.

Who’s Next To Follow El Salvador?

Eyeballs galore will be pinned to the great Salvadoran experiment from now on. People with PhDs in economics and applied statistics within central banks and research institutes will chase every accessible data point that could be remotely helpful in making sense of the effects of Bitcoin’s adoption as legal tender.

Obviously, not many nation states are poised to follow suit in the foreseeable future, but there are plenty lessons to be learned for states on every step of the global financial food chain.

While the way various jurisdictions process the precedent of El Salvador heavily depends on where they stand in the incumbent monetary order, it has surely spurred virtually everyone’s thinking on crypto regulation and CBDC deployment, and legalizing cryptocurrency payments.

Regulators Behaving Sketchy

Much of Coinbase’s chagrin seems to boil down to the fact that the SEC’s scrutiny fell on them rather than competitors who’d had similar lending products operating for months. There is case to be made, however, that for the industry it could be a good thing if the precedent-setting clash on the matter of crypto lending programs takes place between the SEC and Coinbase.

Diem Struggles, Digital Euro Doing Fine

Facebook reportedly continues the lobbying effort to advance its longstanding plan of launching a private stablecoin, Diem. The effort, however, faces powerful opposition among officials in Treasury and Congress.

Updated: 9-14-2021

El Salvador’s Bitcoin Wallet Is ‘95% Fixed,’ President Bukele Says

El Salvador’s state Bitcoin wallet has continued facing major issues one week after its official rollout.

Just a week after Bitcoin (BTC) became legal tender in El Salvador, President Nayib Bukele has admitted that the rollout of the state Bitcoin wallet was too much of a challenge.

Chivo, El Salvador’s official Bitcoin wallet, has temporarily disabled new registrations and halted app downloads for new smartphone models due to ongoing issues with the app, Bukele said on Twitter late Monday.

“Both things will be enabled until the application has no errors,” the president noted, adding that the Chivo team expects to resume registrations and downloads in a couple more days.

“The technical errors of the Chivo wallet have been 95% fixed. In the next few days it will be working at 100%,” Bukele wrote.

He noted that El Salvador’s 200 Bitcoin ATMs currently “work perfectly,” as well as 50 Chivo-supported ATM in the United States.

Bukele Went On To Say That The Bumpy Rollout Of The Chivo Wallet Was Due To An Early Rollout, Stating:

“Launching everything in three months was too much of a challenge and we made mistakes, but we are already fixing them and hundreds of thousands of Salvadorans can already use Chivo with no issues.”

According to the president, the Chivo wallet has amassed a total of half a million users since the app’s launch last Tuesday.

As previously reported, El Salvador launched the official Bitcoin wallet in cooperation with Mexican crypto exchange Bitso, which said it was the “core crypto service provider” for Chivo.

The wallet subsequently faced major issues on launch day, going offline for maintenance due to capacity errors. Despite Chivo’s prompt efforts to fix the issues, many users have apparently continued experiencing problems with transacting or withdrawing from Chivo, with some users claiming that the app’s functionality was “almost zero.”

Santiago Alvarado, director of cross-border payments at Bitso, declined to comment on the Chivo wallet’s functionality to Cointelegraph, stating that the exchange “is not at all involved with the front-end development of the Chivo wallet.” Alvarado added that Chivo’s front-end provider is the Latin American financial infrastructure firm Koibanx, while the digital asset company BitGo serves as the hot wallet provider.

El Salvador’s Bitcoin Wallet Is Used By More Than Half A Million People, President Says

The president also addressed the technical errors that blighted the first few days of El Salvador’s adoption of bitcoin as legal tender.

More than half a million people in El Salvador are using the country’s bitcoin wallet following adoption of the cryptocurrency as legal tender on Sept. 7, President Nayib Bukele said.

* The Salvadoran government developed the Chivo wallet alongside Mexico-based crypto exchange Bitso to enable citizens to spend and receive crypto.

* “We currently have more than half a million users,” President Bukele tweeted on Monday. El Salvador has a population of almost 6.5 million people.

* The president also addressed the technical errors that blighted the first few days of El Salvador’s adoption of bitcoin as legal tender.

* Chivo’s technical errors are “95% corrected,” he tweeted, with expectation that the software would be fully operational within the coming days.

Updated: 9-15-2021

Protesters Burn Bitcoin ATM As Part Of Demonstration Against El Salvador President

The Chivo machine could be seen defaced with anti-BTC logos and a sign saying “democracy is not for sale.”

Bitcoin detractors and those protesting the policies of El Savador President Nayib Bukele have destroyed a crypto kiosk in the nation’s capital city.

News outlet Teleprensa and others posted videos on social media showing a Chivo-supported kiosk in San Salvador burning amid a crowd of journalists and protesters on Wednesday. The Bitcoin (BTC) machine, one of many arranged by the El Salvador government since its acceptance of the cryptocurrency as legal tender in the country, could be seen defaced with anti-BTC logos and a sign saying “democracy is not for sale.”

Los manifestantes quemaron el kiosko Chivo como medida de protesta contra el #Bitcoin.

Vía @Luis33Tv #Teleprensa33 #Nacionales pic.twitter.com/XlacUWCPNN

— Teleprensa (@Teleprensa33) September 15, 2021

San Salvador Mayor Mario Durán said city workers had pulled out of the area after receiving threats but planned to return later this afternoon. At the time of publication, the damage seems to be limited to the Chivo machine in the Plaza Gerardo Barrios in the center of the capital city, but protesters also reportedly burned furniture from one of the plaza’s shops.

The Chivo kiosk — similar to a Bitcoin ATM — is one of roughly 200 in El Salvador, part of the government’s rollout to accept BTC as legal tender alongside the U.S. dollar. President Bukele has said he hopes the crypto ATMs will eventually be “everywhere” in the country, but has claimed that no one will be forced to use Bitcoin.

Even before the Bitcoin Law went into effect on Sept. 7, El Salvador faced resistance to the seemingly radical legislation. Protesters calling themselves the Popular Resistance and Rebellion Block marched in the capital city streets in July, while a group consisting of retirees, veterans, disability pensioners and other workers formed their own demonstration the following month.

#️⃣ #AHORA | Grandes marchas en El Salvador, contra el presidente Bukele, por el uso del Bitcoin. pic.twitter.com/fnsBjQIJ0e

— Mundo en Conflicto (@MundoEConflicto) September 15, 2021

The same day the country’s Bitcoin Law went into effect, the price of the crypto asset dipped below $43,000, prompting Bukele to say he had “bought the dip” with the purchase of an additional 150 BTC. At the time of publication, the BTC price is $47,978, having risen by more than 3% in the last 24 hours.

Updated: 9-16-2021

El Salvador Watchdog To Investigate Government Bitcoin Purchases, ATMs

The Court of Accounts received a complaint on Sept. 10 from the regional human rights and transparency organization Cristosal.

El Salvador’s public management watchdog will investigate a complaint over the government’s handling of bitcoin purchases and subsequent crypto ATMs, a regional human rights group announced Thursday.

The Court of Accounts, a constitutionally mandated state body responsible for the technical and legal control of the country’s Public Treasury, received a complaint on Sept. 10 from the regional human rights and transparency organization Cristosal, the group said.

Cristosal requested an audit of the authorization process for the purchase of bitcoin under its newly minted law, Reuters reported.

The watchdog has the power to impose administrative and asset sanctions and to present notices to the attorney general’s office asking for criminal proceedings to be brought forward.

El Salvador broke new ground this month after it officially recognized bitcoin as legal tender alongside the U.S. dollar on Sept. 7.

Cristosal’s complaint was made against six members of the board of directors of the Bitcoin Trust, which is made up of members from the Finance and Economic ministries.

“Having admitted the complaint, it will be proceeded to carry out the legal analysis report and, in a timely manner, forward such report to the General Audit Coordination,” the watchdog said.

Opposition to the country’s Bitcoin Law has been vocal with protests across the capital, San Salvador, taking place to denounce the law and President Nayib Bukele’s alleged corruption.

Updated: 9-17-2021

El Salvador’s Credit Rating Could Take A Hit Amid Bitcoin Adoption, Warns S&P Global

S&P Global believes El Salvador’s recognition of Bitcoin as legal tender has brought “immediate negative implications” for its credit rating.

Credit rating agency Standard and Poor (S&P) Global believes the country of El Salvador has severely harmed its credit rating after enacting its Bitcoin Law recognizing Bitcoin (BTC) as legal tender nationwide on Sept. 7.

According to a report from Reuters Thursday, El Salvador’s Bitcoin embrace exposes its economy to significant financial risks and could pose challenges for the country’s lending industry.

The credit agency also believes the move could also dampen El Salvador’s chances of securing a $1-billion loan agreement it is seeking from the International Monetary Fund (IMF).

“The risks associated with the adoption of bitcoin as legal tender in El Salvador seem to outweigh its potential benefits,” S&P said, emphasizing the “immediate negative implications” of the Bitcoin Law for the country’s credit rating.

International credit rating agencies offer a grim outlook for El Salvador’s ranking amid the lead-up to the BTC adoption.

Prior to Salvadoran President Nayib Bukele announcing his intention for the country to recognize BTC as legal tender in June of this year, Fitch had stamped El Salvador with a B- in April 2020 — assessing the country as high risk with a negative outlook.

S&P’s last assessed El Salvador’s credit score as being a B- as of Dec. 28, 2018, suggesting it may be due for an update, given the dramatic shift in the nation’s monetary policy.

While President Bukele maintains high approval ratings among the Salvadoran populace, his leadership and government have faced backlash for enacting the Bitcoin Law despite the country’s low rates of crypto literacy.

To my English-speaking Twitter friends: This 15/9/21, El Salvador did not celebrate 200 years of independence. Instead, we filled the streets to protest the breaking of our democracy, rule of law, and an incipient dictatorship. THIS is why we marched. #El15Marchamos pic.twitter.com/wyf1B4QzgZ

— cg (@NorteSur7) September 16, 2021

There also appears to be push back abroad from financial agencies, such as the World Bank and IMF, which have both reiterated cautious sentiments this month regarding the adoption of BTC as legal tender.

IMF spokesperson Gerry Rice stated in a press briefing on Thursday that while the fund is still in discussions with El Salvador over a potential support program, it hasn’t changed its stance that the consequences of BTC adoption could be “dire.”

“The potential of an IMF program for El Salvador is under discussion. Again the objectives of that are clear: growth, financial stability and so on. On the specific Bitcoin issue, I think we’ve been fairly clear in our public statements,” Rice said.

On Sept. 7, a World Bank spokesperson told Reuters that “while the government did approach us for assistance on Bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings.”

Updated: 9-18-2021

El Salvador Ranks Third In Global Bitcoin ATM Installations, Data Finds

The Salvadoran government has installed over 200 ATMs in September after adopting Bitcoin as a legal tender.

El Salvador now hosts the third-largest network of crypto ATMs after the United States and Canada, amounting to 70% of all crypto ATMs in South America.

According to data from Coin ATM Radar, El Salvador has exceeded United Kingdom’s crypto ATM count after deploying 205 crypto ATMs to date to facilitate local Bitcoin transactions and conversions from Bitcoin (BTC) to U.S. dollars.

Comparing this to Statista data from Aug. 16, it becomes evident that El Salvador has successfully installed 201 ATMs in just one month. Beforehand, the country ranked 43rd on the list with just four functional crypto ATMs.

President Nayib Bukele had previously stated that Bitcoin’s adoption would be initially supported by a network of 200 ATMs and 50 branches. The Salvadoran government has partnered with an in-house cryptocurrency wallet provider named Chivo to power the BTC wallets and ATM usage in the country.

Crypto ATM installations are at an all-time high around the world, with 27,664 active machines and 2,790 new machines being added in September. The increase in El Salvador’s ATM installation drive aligns with the recent presidential order that requires all businesses to accept payment in Bitcoin. However, the merchants retain the option to convert Bitcoin payments to USD before withdrawing their earnings.

While other jurisdictions are yet to decide on Bitcoin’s use case as a mainstream asset, an average of 63.7 ATMs continue to get installed globally every day. Genesis coin remains a leading crypto ATM manufacturer with a market share of 40.7%, while General Bytes and BitAccess represent 22.7% and 12.7% of the market, respectively.

El Salvador’s Bitcoin adoption has seen some resistance from locals, which recently led to the burning of a Chivo-supported Bitcoin machine. Those protesting adoption of Bitcoin highlighted concerns regarding uncertainty, price fluctuation and lack of exposure to the crypto market.

The Chivo kiosk is the government’s first attempt to create an infrastructure for BTC and U.S. dollar conversions. Currently, El Salvador uses both Bitcoin and the U.S. dollar as legal tender.

Updated: 9-20-2021

El Salvador Acts On Bitcoin Price Dip And Buys 150 BTC

El Salvador didn’t miss the chance to buy the dip as Bitcoin’s price fell back to $45,000 after a bullish week.

Despite warnings from global agencies regarding its adoption of Bitcoin (BTC), El Salvador’s government continues to seize market opportunities.

As the Bitcoin price fell below $46,000 on Monday morning, Salvadoran President Nayib Bukele announced on Twitter that the country has “bought the dip.” With 150 new coins, the Central American government now holds 700 BTC, worth close to $32 million at the time of writing.

In an obvious nod to the “not financial advice” disclaimers shown around the crypto ecosystem, Bukele shared his “presidential advice” by reminding, “They can never beat you if you buy the dips.”

Presidential advice

— Nayib Bukele (@nayibbukele) September 20, 2021

As reported by Cointelegraph, El Salvador bought another dip on the day BTC became legal tender in the country, when Bitcoin experienced a flash crash to below $43,000.

El Salvador’s move toward adoption got the crypto universe excited, especially with the possible tax exemption for Bitcoin investors. However, the government’s decision to adopt Bitcoin as legal tender is not totally free of problems.

Aside from protests and marches against the government’s Bitcoin move, credit rating agency Standard and Poor’s Global said that the adoption “has immediate negative implications” for the country’s credit rating. S&P also claimed the move would hurt El Salvador’s chances of securing a $1-billion loan agreement from the International Monetary Fund.

El Salvador made history by becoming the first country to recognize Bitcoin as legal tender on Sept. 7. The government held 400 BTC then. By taking advantage of two price dips in two weeks, purchasing 150 coins each time, El Salvador raised its Bitcoin holdings to 700 BTC.

El Salvador Leader Bukele Extends Bet On Bitcoin After 16% Loss

El Salvador is doubling down on its Bitcoin bet as the price plunges, with its president saying, “They can never beat you if you buy the dips”.

The country took advantage of the recent fall in prices to buy another 150 coins, taking its total to 700, President Nayib Bukele said in a post on Twitter. Bukele made the comments late Sunday night, before the sell-off accelerated on Monday.

The volatile cryptocurrency has lost about 16% of its value since Bukele announced the first purchases on Sept. 6. The nation’s coins are worth about $31 million at current prices.

Prices of Bitcoin and other digital currencies slumped on Monday as a broad selloff sparked by worries about contagion from China Evergrande Group swept through global markets. Bitcoin dropped as much as 10.7% to $42,522 in New York trading hours, to its lowest level since the beginning of August.

El Salvador made Bitcoin legal tender alongside the dollar from Sept. 7 in the biggest test so far of the currency’s usefulness as a medium of exchange.

Bukele recently changed his Twitter profile to read, “Dictator of El Salvador”, an apparent response to comments by anti-government protesters who accused him of dictatorial tendencies after he fired supreme court justices and the attorney general, and began preparing constitutional reforms that would change term limits and allow him to stay in office.

The presidency’s press office didn’t immediately reply to written requests for comment.

Updated: 9-25-2021

A Third Of Salvadorans ‘Actively’ Using Chivo Wallet, President Bukele Claims

On Sept. 6, El Salvador became the first country to adopt BTC as legal tender, attracting both praise and criticism from the global community.

Salvadoran President Nayib Bukele claims that 2.1 million of his fellow citizens are using the government-backed Chivo cryptocurrency wallet, offering a glimpse into the apparent success of the country’s Bitcoin (BTC) gambit.

The controversial president updated his 2.9 million Twitter followers Saturday afternoon, claiming that Chivo “now has more users than any bank in El Salvador” after just three weeks in operation. Bukele indicated that it’s only a matter of time before Chivo adoption eclipses all banks in El Salvador combined.

2.1 million Salvadorans are ACTIVELY USING @chivowallet (not downloads).

Chivo is not a bank, but in less than 3 weeks, it now has more users than any bank in El Salvador and is moving fast to have more users that ALL BANKS IN EL SALVADOR combined.

This is wild!#Bitcoin

— Nayib Bukele (@nayibbukele) September 25, 2021

The state-issued Chivo wallet launched in early September as El Salvador officially recognized Bitcoin as legal tender — a landmark move that could offer an important case study for other countries in the region. Chivo enables individuals and businesses to send and receive payments in Bitcoin or dollars from anywhere in the world.

The wallet is available on both Android and Apple devices. As Cointelegraph reported, Mexican cryptocurrency exchange Bitso has signed on as the core service provider for Chivo.

Bukele’s latest update suggests that the Bitcoin Law is being received favorably across the country, even as hundreds of anti-government protestors took the streets to voice their opposition. On Sept. 15, those protests culminated in the burning down of a crypto kiosk in the nation’s capital city.

To be sure, mass adoption of Chivo is due in part to the government airdropping $30 worth of BTC to every Salvadoran account holder. According to a recent survey from São Paulo-based agency Sherlock Communications, slightly more than half of Salvadorans have no familiarity with Bitcoin.

In the meantime, Bukele’s government has been filling its coffers with BTC following a series of volatile price swings for the digital asset. El Salvador “bought the dip” on at least two recent price drops — Sept. 7 and Sept. 20 — bringing its total holdings to 700 BTC.

Updated: 9-29-2021

El Salvador President Teases Geothermal Bitcoin Mining Farm

El Salvador’s president showed the supposed first steps of a geothermal Bitcoin mining facility.

The video shows an overview of a power generation facility, with technicians enabling crypto mining rigs.

First steps…

#Bitcoin pic.twitter.com/duhHvmEnym

— Nayib Bukele (@nayibbukele) September 28, 2021

Bukele did not elaborate much on the process shown on the video, only writing “first steps” with a Bitcoin tag alongside emojis depicting a volcano and El Salvador’s national flag. The president’s office did not immediately respond to Cointelegraph’s request for comment.

The post comes months after Bukele announced plans to build a geothermal Bitcoin mining facility. The president said in June that he would be instructing state-owned electrical company LaGeo to manage a Bitcoin mining plant powered with “very cheap, 100% clean, 100% renewable, 0 emissions energy.”

El Salvador officially accepted Bitcoin as legal tender on Sept. 7 to work alongside United States dollars, just three months after the nation’s Legislative Assembly passed the “Bitcoin Law.”

The latest move by the Salvadoran government reaffirms the massive potential for Bitcoin proponents to cut BTC’s carbon footprint, using a wide number of renewable energy sources, including hydroelectric, solar and wind power.

According to Tesla CEO Elon Musk, Bitcoin already hit its benchmark on renewable energy in July, suggesting that the percentage of renewable energy usage was “likely at or above 50%.”

El Salvador’s Bitcoin Volcano Can Be A Model For Cleaner Crypto

The Central American nation is taking its first steps to harness massive natural power sources to mine Bitcoin. The impacts could stretch far beyond the world of crypto.

Yesterday afternoon, Salvadoran President Nayib Bukele posted a short video of workers installing a shipping container full of cryptocurrency mining rigs at a geothermal power plant surrounded by thick jungle. “First steps … #Bitcoin,” the president tweeted.

First steps…

🌋#Bitcoin🇸🇻 pic.twitter.com/duhHvmEnym

— Nayib Bukele 🇸🇻 (@nayibbukele) September 28, 2021

Updated: 10-1-2021

El Salvador Mines First Bitcoin With Volcanic Energy

Almost 22% of the country’s power market is geothermal.

El Salvador has officially mined the first bitcoin using volcanic energy, its president revealed.

* President Nayib Bukele shared a screenshot of a mined bitcoin on Twitter, calling it “officially the first bitcoin mining the volcanode.”

* The news follows the Salvadoran president’s announcement earlier this week that the country was taking its “first steps” toward harnessing volcanic energy for bitcoin mining.

* Following the approval by El Salvador’s congress for the adoption of bitcoin as legal tender in June, Bukele said he had instructed state-owned geothermal electric company LaGeo to allow bitcoin miners to tap the country’s volcanic resources.

* With 20 “potentially active” volcanoes according to VolcanoDiscovery.com, which account for almost 22% of the country’s energy supply, El Salvador’s harnessing of geothermal energy could provide an answer to the hunt for a reliable clean energy source to power bitcoin mining.

We’re still testing and installing, but this is officially the first #Bitcoin mining from the #volcanode 🌋

— Nayib Bukele 🇸🇻 (@nayibbukele) October 1, 2021

Updated: 10-2-2021

Bitcoin Launch Sparks Wave of Crypto Speculation In El Salvador

Bitcoin has unleashed a wave of speculation in El Salvador since its adoption as legal tender last month.

Uber drivers, waiters and store owners are day-trading the cryptocurrency on their phones, buying dips and selling rallies with a government app that comes pre-loaded with $30 worth of Bitcoin.

The government’s new digital wallet, called Chivo, was designed to facilitate Bitcoin transactions, but the ease with which users can top up their balances and switch instantly between dollars and tiny, fractional amounts of the cryptocurrency makes it a perfect tool for speculation.

In the capital San Salvador, many large chains such as Starbucks, McDonald’s and supermarkets accept the digital currency for purchases, and some smaller businesses are also taking it. In the city’s downtown, electronics store owner Santos Enrique Hernandez says he sees as many as 10 customers a day paying in Bitcoin for the headphones, chargers and phone cases he sells.

Chivo, which is slang for “cool”, can be faster than cash or credit cards, he said. It also allows him to speculate on price swings, buying Bitcoin when its price drops, then converting it back to dollars if it goes back up. He says he made $12 in two days speculating on such movements.

El Salvador’s plan, the brainchild of 40-year-old President Nayib Bukele, is the biggest test for Bitcoin in its 12-year history. A successful rollout that produces tangible benefits for the impoverished Central American economy and sees broad-based acceptance by Salvadorians as Bitcoin circulates alongside the U.S. dollar could convince other countries to give cryptocurrency a try too.

2 Million Users

El Salvador adopted the cyptocurrency as legal tender Sept. 7 and more than 2 million people in the country of 6.5 million are users of Chivo, according to Bukele. The $30 of free Bitcoin is equivalent to about 8% of the monthly minimum wage.

Many users are only spending and speculating with the coin provided free by the government, but some are topping it up with their own savings.

One customer at Hernandez’s electronics store, 31-year-old Luis Alfredo Gomez, bought a $15 memory card for his phone and paid through his Chivo app. The Bitcoin showed up instantly in the wallet on Hernandez’s phone. But not all transactions are so seamless, Gomez said.

“The annoying thing is that there isn’t always coverage, but, when it works, it works well,” Gomez said.
Father’s Advice

After Bitcoin rallied 11% on Friday, German Martinez, a 61-year-old Uber driver in San Salvador told his daughters they would have made money had they listened to his advice and downloaded the app.

“It’s like credit cards,” he said. “We got used to using plastic, and now we need to start using crypto. The world has to evolve.”

Josue Martinez, a 26-year-old barista at Cafe Fulanos in San Salvador, says the Chivo network is often down. The coffee shop started accepting Bitcoin on Sept. 7, but some customers walk out after being told the payment system isn’t working correctly.

Many Salvadorans bailed as soon as they could, converting their free Bitcoin into dollars via one of the 199 Chivo ATMs installed across the country. There used to be 200, but one was burned in an anti-government protest.

To promote adoption, the $30 in free Bitcoin does come with the condition that it be used in a transaction before it can be converted into cash. As a work-around, Salvadorians send the Bitcoin to a relative, who’ll then send it back, thereby lifting the block.

Roxana Ruana, who was waiting in line at a Chivo ATM with her daughter to withdraw the $30, said her brother lives in the U.S. and sends them about $150 a month. She said if the Chivo app can help save them the $15 in fees they pay to receive remittances via Western Union, it will help them grow the family business of selling women’s clothes in San Salvador.

With more than 2 million Salvadorans living in the U.S., remittances account for over 20% of the nation’s gross domestic product. Bukele cited the reduction in remittance fees as one of Bitcoin’s main benefits.

Privacy Fears

Not everyone shares his enthusiasm. Architect Carlos Hernandez and digital activist Roberto Dubon declined to download the app, because they don’t want the government to have access to their data.

“Bitcoin’s spirit when it was designed was to not let governments intervene, so why is the government of El Salvador using it?” Dubon said. “It’s like handing over your phone to the state intelligence agency.”

Hernandez said the fact that the government removed the app from stores for several days after its rollout is a red flag that should deter people from holding money in it.

“It’s like an on and off switch, and if they take it offline what recourse do you have?” Hernandez said.

He also criticized Bukele’s purchase of 700 Bitcoins in September as “gambling with my tax dollars.”

Political Risk

Wilfredo Hernandez, a 37-year-old line cook, planned to withdraw the $60 that he and his wife had in their Chivo wallets from the government, but found it had dropped to $57 by the time he got in line at the ATM.

The Bitcoin experiment is a big risk for Bukele, said Valeria Vasquez, Central America analyst for risk consultancy Control Risks. If Salvadorans start to lose money in their crypto wallets, it could cost him popular support, she said. The price of Bitcoin has fallen by about 7% since Bukele announced the first purchase of a batch of 200 coins on Sept. 6.

Bukele wants to change the constitution to allow re-election, and needs to maintain his high approval ratings to allow this to happen, Vasquez said.

Protests against Bitcoin and Bukele’s decisions to fire judges and an attorney general attracted thousands on Sept. 15, and smaller marches continued through the end of the month. Another protest against Bukele’s government and the adoption of Bitcoin are planned for Oct. 12.

Updated: 10-4-2021

El Salvador Introduces Fuel Subsidy Of $0.20 Per Gallon To Locals Who Pay In BTC

El Salvador is looking to bolster adoption of its government-issued Chivo Bitcoin wallet by offering discounts on petrol purchases of $0.20 per gallon to consumers who pay using BTC.

Salvadoran President Nayib Bukele has announced that local consumers can enjoy a $0.20-per-gallon reduction in petrol prices when paying, using the government-backed Bitcoin wallet, Chivo.

Describing the news as “positive news for the pockets of Salvadorans,” the president announced the subsidy via Twitter on Thursday. According to a rough translation, Bukele stated:

“The state company Chivo negotiated with the largest gas station companies in our country, so that starting tomorrow, their stations will sell each gallon of fuel $ 0.20 cheaper, with Chivo wallet.”

Bukele emphasized that there is no limit to the discount and that any local person or company can access the rebate. He added that the discount will erase “several increases in the international price of fuels” and “reduce transportation costs in supply chains.”

However, some Salvadorans appear unconvinced that the subsidy ultimately benefits the public, with Twitter user Adan 3840 responding:

“Those 20 cents will come from all of us, right? The gas station does not lose, there goes the refund after paid with the taxes of even those who walk on foot.”

Others were cynical of the government’s decision to offer the discount to only those who pay using Chivo, with another Twitter account questioning why the administration did not move to offer relief on fuel prices at an earlier date.

Alongside the news, Bukele also revealed that he has authorized a fund intended to “stabilize” the domestic price of liquified gas. The president asserted that while the international market had planned a $1.17 rise in the price of 25-pound cylinders of liquified gas, Salvadoran locals will experience “a slight reduction” in cost.

He added that the government will absorb the increase for one year only, noting any reductions in global gas prices will also be passed on to consumers during the period.

El Salvador became the first country to legally recognize Bitcoin as legal tender on Sept. 7. Later that month, Bukele claimed that one-third of Salvadorans were already using Chivo less than three weeks after its launch.

However, onlookers have expressed skepticism regarding Bukele’s reports of surging crypto adoption, with outspoken crypto critic and author David Gerard asserting that Salvadoran officials are “feeding Bukele numbers that please him” that “fall apart under the slightest examination.”

In his “Attack of the 50 Foot Blockchain” newsletter, Gerard analyzed Chivo usage metrics reported by Bukele to conclude that the government-backed wallet “would be doing more transactions a day than Visa does worldwide” if the president’s data were accurate.

Updated: 10-7-2021

El Salvador’s State-Owned Banco Hipotecario Taps Four Crypto Startups For Blockchain Products

The four-member alliance is already working on products to boost financial inclusion with bitcoin in the Central American country.

The adoption of bitcoin as legal tender in El Salvador has forced the local financial system to adapt.

Staring down these changes, Banco Hipotecario, a national commercial bank in El Salvador, has started working with four companies that will develop blockchain products they say will increase financial inclusion for the bank’s customers.

The bank started working with an alliance formed by TESOBE, the company behind the Open Bank Project, and API3, a decentralized autonomous organization that provides data feeds to blockchain-based smart contracts.

“We are working with the bank to figure out what kind of steps need to be done, so that we can put our technologies together,” said Robert Rico, Head of Open Banking at API3, who also said the Central Bank of El Salvador and government officials were a part of the exploratory talks.

Rico added that there is still no estimated date for the launch of any product.

The products could be related to bitcoin payments or bitcoin holding in balance sheets or personal portfolios, Qredo COO Josh Goodbody said.

According to Edan Yago, co-founder of Sovryn, there could be custody products with the ability to provide information from the bank through APIs to the blockchain and vice versa, in addition to the development of lending and trading services, and bitcoin-backed stablecoins.

According to the announcement, Qredo’s decentralized custodial infrastructure will aid bitcoin banking in El Salvador, while Sovryn will provide an infrastructure “to enable traditional banks to offer bitcoin-native DeFi products such as lending, trading and bitcoin backed-stablecoins to their customers.”

The feedback from the bank was “very positive,” Goodbody added.

So far the alliance is only working with Banco Hipotecario, the companies told CoinDesk.

“The Bitcoin Law is very vast because it essentially allows people to either accept bitcoin or the U.S. dollar, and we want to make sure that we help in that process as much as possible,” Rico said.

Simon Redfern, CEO of TESOBE and founder of the Open Bank Project, said in a statement that the combined technologies will help Banco Hipotecario deliver more transparent and inclusive financial services to Salvadorans – especially the underbanked part of the population.

He also said the joint effort will remove many of the uncertainties that stand between El Salvador and the advantages of cryptocurrency adoption.

Banco Hipotecario de El Salvador is one of the country’s four state-owned banks, along with Banco de Fomento Agropecuario, Banco de Desarrollo de El Salvador (Bandesal) and Banco Central de Reserva – El Salvador’s Central Bank – which does not issue its own currency as the U.S. dollar and bitcoin are used as legal tender.

“This alliance is a great opportunity for El Salvador to create new financial products that support the needs of our Salvadoran citizens,” said Celina Padilla, president of Bank Hipotecario de El Salvador, in a statement.

Updated: 10-11-2021

El Salvador To Build $4M Veterinary Hospital Using Profits From Bitcoin Trust

Salvadoran President Nayib Bukele said no Bitcoin will be sold to fund the investment, with the state instead drawing USD from its Bitcoin trust.

Salvadoran President Nayib Bukele has announced plans to invest part of the $4 million worth of profits the country has amassed from its Bitcoin (BTC) holdings to invest into constructing a new veterinary hospital in the local capital of San Salvador.

Taking to Twitter on Sunday, Bukele revealed that El Salvador’s state-operated Bitcoin trust currently holds $4 million worth of profits gleaned from its recent Bitcoin embrace.

Bukele announced that part of the funds will be invested into constructing a veterinary hospital featuring four operating rooms, four emergency clinics, 19 offices, and a rehabilitation area. “We decided to invest a part of that money in this: a veterinary hospital for our furry friends,” he said.

Bukele added the facility will aim to be able to perform 64 surgeries, respond to 128 emergencies, and tend to nearly 400 general appointments daily, sharing a computer-generated mock-up of the hospital to social media.

Así que decidimos invertir una parte de ese dinero en esto:

UN HOSPITAL VETERINARIO para todos nuestros peluditos. Que incluirá:

12 Consultorios básicos
4 Consultorios de emergencia
4 Quirófanos
Área de rehabilitación
Aislamientos
Hospitalizaciones
Recuperación

Sigue… pic.twitter.com/Puq6bRb2Ob

— Nayib Bukele (@nayibbukele) October 10, 2021

The news was met with mixed reactions on Twitter, with many Salvadorans suggesting alternative uses for the country’s crypto profits.

According to a rough translation, Twitter user Norma De Serrano said it would be better for the money to be invested in improving the existing medical facilities across the country, emphasizing that many hospitals and health units “need to be improved” — with many other commenters expressing similar concerns.

Others criticized the government for failing to invest in infrastructure outside of the country’s capital.

The news comes as Bitcoin’s market capitalization recently broke above $1 trillion for the first time since May, with BTC rallying nearly 20% from $47,000 to more than 55,000 during the past week.

Updated: 1-24-2023

Bukele Says El Salvador Paid Full $800 Million of Debt Due

* Nation’s President Announces Repayment Of 2023 Bond On Twitter
* Next Major El Salvador Foreign-Bond Maturity Comes Due In 2025

El Salvador’s Bitcoin-touting President Nayib Bukele said the nation fully repaid a maturing foreign bond, staving off default after securing a last-minute loan and buying back millions of dollars of its own debt.

Bukele on Tuesday announced payment of principal and interest on $800 million of the Central American nation’s dollar bonds maturing Jan. 24. El Salvador had already bought back a portion of the debt, leaving just $604 million of bonds to mature on Tuesday.

Well, we just paid in full, 800 million dollars plus interest.

But of course, almost nobody is covering the story.

I just found one, yes ONE, in spanish, from Colombia https://t.co/PcRES3poE1

They lie and lie and lie, and when their lies are exposed, they go on silence mode.

— Nayib Bukele (@nayibbukele) January 24, 2023

Analysts and investors had grown increasingly optimistic that the nation would avert default in January. El Salvador locked in a $450 million loan from a multilateral lender, the Central American Bank for Economic Integration, and carried out two debt repurchases in recent months.

That helped trigger a comeback in its beleaguered foreign bonds, which rallied an average of 24% this month as the maturity date approached, according to data compiled by Bloomberg.

After a successful payment, “we would expect the curve to rally somewhat,” especially the bonds due in 2025 and 2027, said Nathalie Marshik, a managing director for Latin America fixed income at BNP Paribas. “The rally should be limited, though, because the payment is expected by the market and priced in.”

Even so, investor concern lingers regarding El Salvador’s bonds due to the symbolic firing of several top judges, the lack of a deal with the International Monetary Fund and the nation’s risky bets on Bitcoin.

Bukele’s administration had purchased 2,381 Bitcoin through June 2022, according to his announcements on Twitter. On Nov. 16, he said the government would buy one Bitcoin every day.

Plus, the 41-year-old leader is gearing up for a controversial re-election bid in 2024.

“While this is a positive event, long term risks remain,” said Citigroup Global Markets Inc. strategists including Esteban Tamayo.

“We expect a return to low growth this year for El Salvador that will likely make it difficult for the country to sustain a primary surplus large enough to avoid a future restructuring without new revenue from reforms or higher fiscal restraint,” the Citi strategists wrote in a note. “Neither of these is likely to take place, as 2024 elections are upcoming, adding pressure on President Bukele to keep his public approval high.”

Barclays strategists Sebastian Vargas and Nestor Rodriguez said they expect the nation’s reserves to drop to $1.5 billion by the end of the year, with further access to external financing sources limited.

Investors still demand an extra 14 percentage points of yield to hold El Salvador’s dollar debt rather than US Treasuries, according to JPMorgan Chase & Co. data, well above the threshold for debt to be considered distressed.

The nation still has about $6.4 billion of foreign bonds outstanding after the 2023 maturity, with the next major principal payment due in 2025, according to data compiled by Bloomberg.

El Salvador already bought back a portion of those notes, leaving just $348 million due on Jan. 30, 2025. The debt hovered just below 73 cents as of 11:30 a.m. in New York.

“With the largest payment out of the way, now El Salvador can fully exploit the gap created by its previous buybacks,” said Santiago Resico, a strategist at TPCG. “The administration can now bide its time to prepare for both the 2025 and 2027 sinkings, having several years to accumulate primary surpluses to face its obligations in the medium run.”

The country was the first in the world to use bitcoin as legal tender.

El Salvador’s $800 million bond issue set to mature on Tuesday has been repaid with interest, President Nayib Bukele said on Twitter.

Finance Minister Alejandro Zelaya confirmed the same news on his Twitter account.

“In the past year, almost every legacy international news outlet said that because of our ‘bitcoin bet,’ El Salvador was going to default on its debt by January 2023 (since we had an 800 million dollar bond maturing today),” Bukele said. “Literally hundreds of articles.”

Bukele noted that he’s only been able to find one article (from a Colombian newspaper) that’s published news of the repayment.

In 2021, El Salvador become the first country in the world to adopt bitcoin (BTC) as an official currency, and earlier this month, the Legislative Assembly of El Salvador approved a law that will serve as a legal framework for the issuance of the country’s long-delayed bitcoin-backed bond, also known as the Volcano Bond.

They all said that without striking an @IMFNews deal, we were going to be unable to pay our 2023 bond because our “#Bitcoin losses”.

I have the receipts… https://t.co/exbQxjdEj4https://t.co/1Hl4pRoBkhhttps://t.co/xcMehNGPZMhttps://t.co/gVK8Jlp3Vqhttps://t.co/qpyz1tDd00

— Nayib Bukele (@nayibbukele) January 24, 2023

1-19-2022: “Will El Salvador default on its debt because of Bitcoin? Markets say yes“. The price of insurance against El Salvador defaulting on its loans for five years has now tripled since the country adopted Bitcoin as legal tender last year. Credit default swaps bet on El Salvador collapse

5-10-2022: “In Fitch’s view, weakening of institutions and concentration of power in the presidency have increased policy unpredictability, and the adoption of bitcoin as legal tender has added uncertainty about the potential for an IMF program that would unlock financing for 2022-2023,” the report stated.

For its part, Moody’s warned in May that “even if the government finds a way to manage near-term financing pressures from the upcoming 2023 bond maturity, Moody’s view is that the sovereign will continue to face funding pressures that would compromise its ability to service its debt commitments in full.”

May 19, 2022: A potential looming debt default and enemies in very high places have made the small Central American country a target for bitcoin detractors. Can it survive long enough to take advantage of the next bitcoin bull market? With the next debt repayment on the horizon for January 2023

6-8-2022: “Owing to El Salvador’s $800 million sovereign bond due in January 2023 and an implied default probability of 48%, international financial markets think there’s about an even chance that the Central American country stops scheduled repayments in eight months, just over a year after adopting bitcoin as legal tender.

El Salvador has stubbornly low economic growth, a wide fiscal deficit and almost 90% of GDP in expensive government debt (costing 5% per year compared with 1.5% in the U.S.). Without major changes in economic policy, the country risks a dangerous sovereign default.” Frank Muci is a fellow at LSE’s School of Public Policy

11-24-2022:  El Salvador is about to default on its sovereign debt. The bond due to January 2023 is yielding 40%. Meanwhile they announced they are buying 1 BTC a day. HODL with the ass of others.

Updated: 2-3-2023

Moody’s Affirms El Salvador’s Caa3 Ratings; Outlook Changed To Stable

New York, February 03, 2023 — Moody’s Investors Service (“Moody’s”) has today affirmed the ratings on the Government of El Salvador (El Salvador) Caa3 long-term foreign-currency issuer rating and the Caa3 rating for the government’s long-term foreign-currency senior unsecured debt. Concurrently, Moody’s also changed the outlook to stable from negative.

The outlook change to stable from negative reflects Moody’s view of a decreased risk of a credit event in the near term, following the distressed exchange in 2022 and the recent repayment of the 2023 international bond.

The principal repayment schedule on external market debt has improved through 2025 and liquidity stress has eased in line with a narrowing of the fiscal deficit.

The affirmation of the Caa3 rating reflects Moody’s view that persistently high financing needs, a lack of access to international capital markets, low debt affordability, and the lack of a credible medium-term fiscal and financing framework will continue to weigh on creditworthiness.

El Salvador’s foreign-currency ceiling remains unchanged at Caa1, maintaining the existing two-notch gap between the sovereign rating and the foreign-currency ceiling to reflect the low predictability of institutions and government policies, weak policy effectiveness and the government’s relatively large share in the country’s total external debt.

We do not assign a local currency country ceiling for El Salvador because the country is fully dollarized.

Ratings Rationale

Rationale For The Change In Outlook To Stable From Negative

Decreased Risk Of A Credit Event In The Near Term

Following the repayment of the sovereign’s international bond due 24 January 2023, El Salvador’s principal repayment schedule on external market debt has improved through 2025, decreasing the risk of a credit event over the near term.

Moody’s estimates that the government’s external debt repayments for the remainder of 2023 will represent 1.7% of GDP, and 2.3% of GDP in 2024 and will be covered by fresh multilateral disbursements.

Multilateral disbursements late in 2022, ahead of the 2023 bond maturity, helped the government meet the principal payment. Prior to this, the sovereign conducted two buyback operations in September and November 2022 that Moody’s viewed as a distressed exchange (a default under Moody’s definition), but that reduced the principal outstanding on its next maturing bond due 30 January 2025 to $348 million (1% of GDP) from an original $800 million.

Despite the sovereign’s lack of access to international capital markets and limited funding alternatives, the remaining principal amount on the 2025 international bond and repayments to official creditors remain manageable so long as multilateral disbursements remain around programmed levels.

Narrower fiscal deficits have also helped to gradually reduce financing needs and eased liquidity stress. Moody’s forecasts that the 2022 non-financial public sector deficit narrowed to 4% of GDP from 5.6% in 2021. Official data suggest that government revenues grew 11.7% in January-November 2022 over the corresponding period the year before, while government spending grew only 1.6%.

Moody’s estimates that 2023 financing needs excluding the recent principal repayment will be 14.8% of GDP and that given no amortizations due on external market debt in 2024, financing needs will ease to 13.9% of GDP, allowing for a further liquidity reprieve.

Updated: 2-10-2023

IMF (Phucking Idiots) Says El Salvador’s Bitcoin Risks Have Not Materialized But ‘Should Be Addressed’

The IMF had suggested that El Salvador “reconsider” its plans for Bitcoin following a recent visit to the country.

The global monetary watchdog has advised El Salvador to exercise caution in expanding government exposure to Bitcoin due to the “speculative nature” of crypto markets.

A Feb. 10 statement from the International Monetary Fund (IMF) emphasized Bitcoin’s risks to El Salvador have “not materialized” yet due to the country’s “limited” use of Bitcoin. IMF staff paid a recent visit to the country.

The IMF stated that El Salvador should address Bitcoin’s risk to the country’s fiscal sustainability and consumer protection, as well as its financial integrity and stability.

It highlighted the importance of acknowledging these risks, as Bitcoin’s use in El Salvador “could grow,” given it had been recognized as legal tender in the country since Sept. 2021.

El Salvador was urged to rethink its decision to issue tokenized bonds, as the IMF stated it should be “eschewed” due to its legal and financial risks. The statement noted:

“Given the legal risks, fiscal fragility and largely speculative nature of crypto markets, the authorities should reconsider their plans to expand government exposures to Bitcoin, including by issuing tokenized bonds.“

The need for “greater transparency” from the Salvadoran government was also emphasized regarding both its Bitcoin transactions and the “financial situation” of its state-owned Bitcoin wallet, the Chivo wallet.

This comes after recent news that a legal framework for a Bitcoin-backed bond in El Salvador, known as the “Volcano bond,” was established on Jan. 11.

The Salvadoran government said that these bonds would be used to pay down sovereign debt and fund the construction of its proposed “Bitcoin City.”

Bitcoin City is part of El Salvador’s plan to continue attracting crypto investors. It was previously noted that a priority for the country in 2023 is to address any possible cryptocurrency-related criminal activity.

Guillermo Contreras, CEO of DitoBanx, previously told Cointelegraph on Jan. 6 that the opening of the National Bitcoin Office in El Salvador will function as “a central entity” to deal with these issues.

Risks over El Salvador’s embrace of bitcoin “have not materialized,” but use of the cryptocurrency still requires transparency and attention, the International Monetary Fund (IMF) said Friday in a statement after a visit to the Central American country.

“Given the legal risks, fiscal fragility and largely speculative nature of crypto markets, the authorities should reconsider their plans to expand government exposures to bitcoin,” the IMF said in a statement.

The annual visit by IMF staff followed a $600 million bond payment by El Salvador last month amid investor concerns over its financing sources and fiscal policy.

The IMF’s so-called “article IV” visit has been sharply critical in the past. El Salvador’s move to make bitcoin legal tender in September 2021 effectively closed the doors to IMF financing.

While the lender noted that risks “have not materialized due to the limited bitcoin use so far,” it said the cryptocurrency’s “use could grow given its legal tender status and new legislative reforms to encourage the use of crypto assets, including tokenized bonds.”

El Salvador’s Congress last month passed a law regulating the issuance of digital assets by both the state and private entities.

President Nayib Bukele announced on Twitter a series of purchases of some 2,380 bitcoin before mid November, when he said the Treasury would buy a bitcoin every day.

If those purchases were made, the government holds nearly 2,470 coins acquired for about $106.4 million. The current value of that investment is $52.2 million, for a paper loss over 50%.

The numbers are Reuters estimates, as the government does not officially disclose purchases, holdings or where the coins are kept.

“Greater transparency over the government’s transactions in bitcoin and the financial situation of the state-owned bitcoin-wallet (Chivo) remains essential,” the IMF said.

The IMF highlighted the “full recovery” of El Salvador’s economy to pre-pandemic levels, “driven by the effective government response to the health crisis.”

Real GDP is projected to grow by 2.4 percent in 2023, the IMF said, above the historical average.

However, the lender also expressed concern over a rising current account deficit and the possible spillover effects of a recession in the United States.

Updated: 2-15-2023

El Salvador To Open A ‘Bitcoin Embassy’ In The United States

After debuting a Bitcoin Embassy in Switzerland’s city of Lugano, El Salvador continues expanding its BTC strategy with a new partnership with Texas.

The world’s biggest cryptocurrency, Bitcoin, is connecting more countries as the government of El Salvador is opening a “Bitcoin Embassy” in the United States.

El Salvador, a country that adopted Bitcoin as legal tender in 2021, is expanding its Bitcoin strategy in a new partnership with the government of Texas.

The intergovernmental collaboration aims to set up a Bitcoin Embassy, or El Salvador’s representative office, in Texas to work on new joint projects to promote Bitcoin adoption.

Milena Mayorga, the Salvadoran Ambassador to the United States, announced the news in a statement on Twitter on Feb. 14.

“In my meeting with the assistant secretary of the government of Texas, Joe Esparza, we discussed the opening of the second Bitcoin Embassy and the expansion of commercial and economic exchange projects,” Mayorga said.

El estado de Texas, nuestro nuevo aliado.

En mi encuentro con el Secretario Adjunto del Gobierno de Texas, Joe Esparza @TXsecofstate, abordamos la apertura de la segunda Embajada #Bitcoin y de ampliar los proyectos de intercambios comerciales y económicos. pic.twitter.com/NcmOjeadl6

— Milena Mayorga (@MilenaMayorga) February 14, 2023

The latest Bitcoin initiative comes a few months after El Salvador opened the first Bitcoin Embassy in Switzerland’s southern city of Lugano in October 2022.

As part of the efforts, the two pro-crypto jurisdictions started working to establish a physical governmental presence to promote cooperation in education and research institutions related to Bitcoin.

According to former Blockstream chief strategy officer Samson Mow, the phenomenon of the Bitcoin embassy is the next step in nation-states and cities adopting Bitcoin.

He said that such initiatives imply cooperation between countries to develop new initiatives like establishing alliances between places that have adopted Bitcoin.

The news comes amid Texas lawmakers reportedly considering a new bill calling for a “a master plan for the expansion of the blockchain industry.”

The legal initiative aims to turn Texas into the crypto capital of the country by introducing tax-free shopping with Bitcoin, among other proposals.

As previously reported, Texas has emerged as one of the crypto-friendly U.S. states, passing crypto-friendly laws aiming to better adapt commercial laws to blockchain innovation and digital asset regulations.

Texas is also home to some of the largest Bitcoin miners in North America, with major mining companies like Riot Blockchain, Core Scientific and Genesis Digital Assets operating in the state.

Updated: 2-20-2023

Drop In El Salvador Crime Likely To Boost Growth, Moody’s Says

* More Cautious Foreign Investors Fret About ‘Governance’ Issues
* Bukele Government Rounded Up Tens Of Thousands Of Gang Members

Improved security in El Salvador following the government’s crackdown on gangs could eventually boost investment as firms and consumers gain confidence, according to Moody’s Investors Service.

There is “significant anecdotal evidence” that crime has dropped in the Central American nation, Moody’s analyst Jaime Reusche said, which could encourage local companies to boost investment.

“The main economic problem in El Salvador’s economy is certainly underinvestment,” Reusche said, in a video call from New York. “If the security situation translates into greater investment, that could certainly be a game-changer for the economy.”

If the safer environment proves sustainable, more cautious foreign investors might follow, though they may be sensitive to “governance” issues, he said.

The government of President Nayib Bukele has jailed tens of thousands of alleged gang members over the last year using emergency powers.

The policy is popular, though human rights groups have criticized the lack of due process, the arrest of government critics, the use of torture and the secrecy surrounding the process.

El Salvador used to be among the world’s most violent countries, and widespread extortion by the gangs was a major brake on economic activity. Retail, tourism and banking are sectors that would benefit from a sustained drop in violence, Reusche said.

As well as crime, the lack of access to credit and financial tools is one of the “biggest impediments to potential growth” in the country, he said.

Moody’s projects El Salvador’s economic growth rate will be 1.7% this year, before accelerating toward its full potential rate of around 2.5%.

US Housing

With more than 2 million Salvadorans living in the U.S, the nation’s economy depends heavily on remittances, which account for more than a quarter of gross domestic product.

However, these inflows have started to decelerate amid a slowdown in the U.S. construction sector where large numbers of migrants work, Reusche said. El Salvador remittance flows are more strongly correlated with U.S. housing than with the broader U.S. economy, he added.

Moody’s has cut El Salvador’s rating three notches since Bukele took office in 2019, to Caa3, meaning the country has “very high credit risk, poor standing.” However, the agency raised its outlook to stable from negative following a January bond maturity payment of $604 million and a more favorable amortization schedule in the near term.

The government still lacks access to global credit markets and faces high financing needs largely funded by expensive, short-term domestic debt.

“It’s still structurally a very weak credit,” Reusche said. “It’s going to take quite a bit to turn this around.”

El Salvador adopted Bitcoin as legal tender alongside the US dollar in 2021. However, “use is so limited that for us it really hasn’t led to any major concerns either in the financial sector or for the broader real economy,” Reusche said.

Updated: 3-24-2023

El Salvador President Bukele To Introduce Bill That Would Eliminate Taxes On Technology Innovations

The country in 2021 became the first nation to adopt bitcoin as legal tender.

President Nayib Bukele on Thursday night said he will be proposing a bill to El Salvador’s congress eliminating all taxes on both software and hardware technology innovations.

Next week, I’ll be sending a bill to congress to eliminate all taxes (income, property, capital gains and import tariffs) on technology innovations, such as software programming, coding, apps and AI development; as well as computing and communications hardware manufacturing.

— Nayib Bukele (@nayibbukele) March 24, 2023

It is unclear yet if this measure will extend to bitcoin (BTC) applications, but El Salvador and its president are known for being bitcoin-friendly, in 2021 becoming the first nation to make the crypto legal tender.

The country’s legislature earlier in 2023 passed a law paving the way for a bitcoin-backed bond.

Updated: 3-28-2023

The New York Couple Behind El Salvador’s Bitcoin Experiment

Former Russia state TV hosts advise government and have crypto investments in the country

SAN SALVADOR, El Salvador—Two New Yorkers who created a popular financial news show on Russian state television and cashed in on the crypto boom have emerged as key advisers to the Salvadoran government on its adoption of bitcoin.

Max Keiser and Stacy Herbert are also investing in bitcoin ventures in the Central American country and are founding backers of a crypto exchange that is helping manage El Salvador’s sovereign debt sale that is linked to bitcoin. The so-called Volcano Token bond will be backed by proceeds from bitcoin mined using geothermal power from a volcano.

The couple first visited the country in 2021, the same year President Nayib Bukele adopted bitcoin as a national currency for the highly indebted nation of six million people.

They are major supporters of the president, advocating his policies on social media, where they have almost 700,000 followers.

“In 500 years from now, President Bukele’s transformation of this society will be taught alongside those of the Renaissance, the Enlightenment, Ancient Rome and Ancient Greece,” Ms. Herbert wrote on Twitter.

Ms. Herbert, a former Hollywood script consultant who describes herself as “fairy godmother, volcano blonde and keeper of the vision,” has been introduced as the head of El Salvador’s National Bitcoin Office.

Mr. Keiser says he serves as a senior adviser to Mr. Bukele, a role confirmed by people familiar with his work.

The bitcoin experiment in El Salvador hasn’t alleviated the country’s poverty and lack of funding needed for government spending. Bitcoin use in the country is scarce, financial sector and business executives say.

Central bank data shows cryptocurrencies make up less than 2% of foreign remittances, which are a main source of income for El Salvador’s $29 billion economy.

The country was racked by gang violence and had one of the world’s highest homicide rates until Mr. Bukele suspended constitutional and civil rights a year ago to confront gangs.

More than 60,000 people with suspected ties to criminal groups have been detained since then. Homicides have plunged as a result, the government says.

Ms. Herbert and Mr. Keiser declined requests for an interview and didn’t respond to questions about their work in El Salvador. Mr. Bukele didn’t respond to requests for comment.

On YouTube shows and podcasts, the couple say they have made investments in bitcoin exchanges over the past decade. The couple’s Heisenberg Capital invested in the parent company of Bitfinex, one of the world’s largest crypto exchanges, according to S&P Global Market Intelligence.

A Bitfinex spokesman declined to comment.

Mr. Keiser brought Bitfinex on board as a financial technology provider for the planned $1 billion Volcano Token offering, said one person familiar with the couple’s work.

Bitfinex has said in statements that it advised Mr. Bukele’s administration on the country’s new law for the issuance of crypto assets, and that it will apply for a trading license under the legislation.

Bitfinex is also an investor in El Zonte Capital, the U.S. couple’s new fund set up to invest in bitcoin ventures in El Salvador, the couple has said.

Ms. Herbert joined the National Bitcoin Office nine months after the launch of El Zonte Capital. The fund said on Twitter that it aims to invest up to $10 million on “seeding the first generation of Salvadoran bitcoin unicorns.”

A unicorn is a privately held startup worth at least $1 billion. The fund said it made its first investment last year in Galoy, a developer of financial software for using bitcoin.

Ms. Herbert says that in her government position she acts as a gatekeeper to prevent scams, determining who is eligible to do bitcoin business in the country.

“To be clear, I will receive no salary, nor any contracts from either El Salvador or any private company. I am doing this for President Bukele,” she said on Twitter.

“We don’t get remunerated in any way,” Mr. Keiser told an interviewer on a Salvadoran YouTube channel last week. “I would say it’s just really an act of love.”

Ms. Herbert’s title at the National Bitcoin Office hasn’t been previously reported.

Photographs taken at a conference last month in San Salvador show signage identifying her as its director. People familiar with her work say that she had a leading role in the government office since its creation last year.

Mr. Keiser said he met Ms. Herbert in an internet cafe in southern France about two decades ago. They became critics of central banks and multilateral lenders, which they say push colonial interests.

Beginning in 2009, the couple ran the “Keiser Report,” a popular financial news show broadcast on the Russian state RT television network, where Mr. Keiser railed against financial corruption and bankers preying on the working class.

In one 2013 broadcast, he claimed to have become a “bitcoin millionaire,” when the asset’s value was just above $40. “I’m loving it,” he said, and predicted the U.S. dollar’s demise.

The couple ended the show after Russia’s invasion of Ukraine, Ms. Herbert wrote in a tweet.

They are celebrities of sorts in El Salvador. Residents approach them to take selfies with Mr. Keiser, who usually combines Bermuda shorts with blazers, along with baseball caps and shirts with slogans promoting bitcoin or Mr. Bukele’s planned re-election run.

On Twitter, they recently posted photos of themselves at a white tablecloth dinner at El Salvador’s presidential palace. Other posts included images of Mr. Keiser celebrating his birthday with a bitcoin-themed cake alongside Mr. Bukele.

Last year, Bitfinex said it transferred more than $1 million worth of bitcoin to the couple to make digital wallet-to-wallet donations to Salvadorans affected by gang violence.

Fernanda Alvarado, a 19-year-old student who runs a coffee liqueur business with her mother, said a group of entrepreneurs from the gang-riddled municipality of Ilopango were invited to meet with the couple last year.

“I was shocked. All of a sudden she transferred about $1,000 in bitcoin to my digital wallet,” Ms. Alvarado said, referring to Ms. Herbert. “We used it to buy supplies, but we had to convert the funds into dollars because suppliers don’t accept bitcoin.”

Mr. Keiser inspired the Bukele administration to issue government debt linked to bitcoin, Mr. Bukele has said.

“I’m sure #Bitcoiners can arrange a $1 billion lending facility stop-gap for El Salvador,” Mr. Keiser wrote on Twitter in mid-2021, during talks between El Salvador and the International Monetary Fund for a $1.3 billion loan.

Negotiations stalled over Mr. Bukele’s policies, including his plans to adopt bitcoin as legal tender, according to people familiar with the talks. The country has since been shut off from international capital markets.

The IMF has urged Salvadoran authorities to remove bitcoin as legal tender. Raphael Espinoza, the IMF’s mission chief to El Salvador, said that IMF staff continue to explore options for engagement on a possible financial aid program.

After adopting the cryptocurrency, Mr. Bukele made a series of announcements of bitcoin purchases totaling more than $110 million.

But the announcements ceased as the market value of the country’s bitcoin holdings plunged. The cryptocurrency is down by about 40% since its adoption as a national currency in September 2021.

There is no public registry of bitcoin holdings at the treasury or central bank, economists and lawyers say.

If Salvadorans had followed the president’s lead, “the fall in value would have unleashed a systemic catastrophe,” said Ricardo Castañeda, senior economist at the Central American Institute for Fiscal Studies, an independent, Guatemala-based think tank.

Updated: 5-7-2023

Fitch Ratings Upgraded El Salvador’s Credit Rating 3 Positions In A Single Day

Long-Term Foreign Currency Issuer Default Ratings (IDR) to ‘CCC+’ from ‘RD’, and upgraded the country ceiling to ‘B’ from ‘B-‘.

Updated: 5-31-2023

‘The Bitcoin Standard’ Author Becomes Economic Adviser To El Salvador

Dr. Saifedean Ammous thinks El Salvador will be debt free if it accumulates Bitcoin for the next five years.

Dr. Saifedean Ammous, the author of an explanatory book about Bitcoin called The Bitcoin Standard, has been appointed the economic adviser to the National Bitcoin Office of El Salvador.

On May 30, the Office announced that the Austrian economist had joined the team as its advisor for matters related to various economic policies.

Dr. Ammous’ now-famous book was first published in April 2018. It analyzes the transition between solid stores of value to inflated assets and fiat currencies, traces the history of money and aims to show how civilizations have changed with their monetary systems.

Regarding the new position, he tweeted on May 30 that he was “excited” to work in the office in “the first country to adopt a Bitcoin standard!”

When the author of the Bitcoin Standard met the leader of Bitcoin Country, great things were bound to happen.

We are excited to announce that @saifedean is joining us as Economic Advisor to the National Bitcoin Office of El Salvador.

Welcome to the winning team, Dr Ammous! pic.twitter.com/LyIljvKvtz

— The Bitcoin Office (@bitcoinofficesv) May 30, 2023

Speaking to local media outlet Diario El Salvador on May 30, Ammous said, “What makes Bitcoin unique is that it gives you the opportunity to have a strong asset that doesn’t depreciate over the years.”

“If you have money that depreciates over time, there is no point in saving and it makes sense to get into debt,” he added.

“If you continue to accumulate Bitcoin for the next five years, there is a good chance that El Salvador will be debt free.”

The National Bitcoin Office (ONBTC) reported that Dr. Ammous recently traveled to El Salvador to lecture students of CUBO+, a Bitcoin and Lightning Network developers program to teach locals the code and concepts.

He also met with President Nayib Bukele and shared his thoughts on the “remarkable benefits of the policy of economic liberty.”

The ONBTC stated that Dr. Ammous declined any remuneration for the role and was only interested in supporting President Bukele’s Bitcoin policy.

El Salvador’s National Bitcoin Office was created in November 2022 by Bukele to manage all things crypto-related.

American broadcaster Max Keiser and television presenter Stacy Herbert are also part of Bukele’s Bitcoin team, in addition to the recently appointed professor.

Max Keiser commented that The Bitcoin Standard “‘Orange Pilled’ millions, including [MicroStrategy founder Michael Saylor] and many corporate and financial heavyweights who keep adding Bitcoin to their coffers daily.”

Updated: 7-19-2023

Morgan Stanley Says Buy Salvadoran Bonds

Morgan Stanley is ready to scoop up battered bonds from El Salvador, which are some of the worst-performing notes this year as the president’s bet on Bitcoin backfires.

The government’s $7.7 billion in eurobonds have been “overly punished” by the market despite El Salvador having better metrics than other distressed peers, Simon Waever, the global head of emerging-market sovereign credit strategy at the bank, wrote in a note Tuesday.

The country’s 2027 bond has slumped 32 cents on the dollar to 28 cents this year, touching a record low of 26.3 cents on Friday.

“Markets are clearly pricing in a high probability of the autarky scenario in which El Salvador defaults, but there is no restructuring,” he wrote.

Waever estimates the debt should trade on average at 43.7 cents on the dollar, even if the country is heading for default, though he recognizes it is unlikely to reach that level soon as global liquidity tightens.

The calculations don’t include an $800 million dollar coming due in January of 2023, which trades much higher at 65 cents on the dollar.

The country could muddle through without missing payments for at least another year, Waever wrote. It runs a primary surplus and has smaller maturities coming due than other distressed peers like Argentina, Egypt and Ukraine.

Emergency Curbs Protests as Sri Lanka Awaits New President

The market pessimism toward El Salvador has often been attributed to President Nayib Bukele’s unpredictable policies — from firing some of the country’s top judges to making Bitcoin legal tender and announcing a failed dollar-bond sale linked to the token.

Since peaking in November, the price of Bitcoin has lost nearly a third of its value, prompting losses of about 48% with Bukele’s Bitcoin gamble that started in September. The nation currently holds about $56 million in Bitcoin, according to data compiled by Bloomberg.

Those policies have also weighed on talks with the International Monetary Fund.

“For a restructuring to work, it nearly always needs the IMF involved and or there to be a clear push for reform by the government,” Waever wrote. “Given this may not be the set-up in a potential restructuring, it could easily end up being a protracted negotiation.”

Updated: 7-20-2023

El Salvador’s Bonds Surge 62% Amid Bitcoin’s ETF-Driven Rally

El Salvador’s bonds due in 2027 have gained 62% in the last six months as the country finds itself on a better financial footing.

There is an old saying in the market that ratings of traditional agencies are lagging indicators. Bitcoin holder El Salvador’s recent experience suggests the same.

Since Fitch downgraded El Salvador’s debt rating in September 2022 with a prediction of a debt default in January 2023, the country’s junk-rated bonds have skyrocketed, mirroring bitcoin’s meteoric rise throughout 2023.

According to market data, the value of El Salvador’s bonds are up 62%, and now trading at 72 cents on the dollar. During the same time period, bitcoin has risen 79%.

El Salvador’s bonds have even outperformed the Invesco Emerging Markets Sovereign Debt ETF (PCY), one of the largest holders of the country’s debt, according to Factset.

In January, the country announced it had repaid an $800 million bond which Moody’s predicted it would be unable to do.

El Salvador announced bitcoin as legal tender in mid-2021 and began accumulating the cryptocurrency from September 2021. As of April, the country holds 2546 bitcoin, according to calculations by Bloomberg. The digital assets were bought for $108.2 million, and are currently worth $76.6 million per current market data.

Separately, Volcano Energy recently announced $1 billion in commitments to build a 241 megawatt (MW) bitcoin mine in the Metapán region of El Salvador. Investors include Tether, the issuer of USDT.

Ratings Agencies Disapprove

El Salvador’s decision to diversify into bitcoin has consistently drawn the ire of ratings agencies and the International Monetary Fund.

“Policy differences related to the government’s embrace of bitcoin have lowered the probability that an IMF (International Monetary Fund) deal will be reached in time to address the government’s upcoming January 2023 $800 million bond maturity,” Moody’s wrote last fall.

In 2021, S&P wrote that El Salvador’s decision to adopt bitcoin as a legal tender would have “immediate, negative implications.”

“The risks” of El Salvador’s bitcoin adoption “seem to outweigh its potential benefits,” S&P wrote at the time. “There are immediate negative implications for (the) credit.”

In February, the IMF said that risks regarding El Salvador’s embrace of bitcoin “have not materialized due to the limited bitcoin use so far.”

“Given the legal risks, fiscal fragility and largely speculative nature of crypto markets, the authorities should reconsider their plans to expand government exposures to bitcoin,” the IMF said in a statement, reported by Reuters.

The change of fortune for Salvador’s bonds appears to be a part of a market-wide trend. Junk-rated bonds of Turkey, Argentina and Nigeria also outperformed investment-grade bonds early this year.

Updated: 7-24-2023

El Salvador Homicide Rate (2010-2023). The Daily Murder Rate For 2023 Is 0.4

El Salvador has Reached 142 Days with Zero Homicides in 2023!

El Salvador homicide rate in 2022 was 1.4 per day or 7.8 homicides per 100,000 inhabitants. The Salvadoran government reported that 2022 closed with 495 murders, a reduction of 56.84% compared to 2021. 2022 ended as the safest year in Salvadoran history since the end of the civil war.

Between January 1 and July 23, 2023, the Salvadoran National Police registered 81 homicides for a 0.4 daily rate. It is 79.9% less than the 402 recorded in the same 2022 period.

At the current rate, El Salvador could close the year with 146 homicides, for a rate of 2.3 homicides per 100,000 inhabitants. Furthermore, this year El Salvador has achieved 142 days with zero homicides.

The homicide stats for 2022 and 2023 do not include the deaths of alleged gang members that have died in confrontations with Salvadoran security forces; 120 deaths in 2022 and 23 thus far in 2023.

The Salvadoran government credits the Territorial Control Plan and Estate of Exception for the drastic homicide reduction experienced since 2019.

The Bukele administration launched the Territorial Control Plan security measure in June 2019; its purpose has been to crack down on the country’s violence and gangs. Then in March 2022, it introduced the controversial Estate of Exception, a direct attack on Salvadoran criminal gangs.

The first three full years of the Bukele administration (2020, 2021, and 2022), have set an unprecedented reduction in homicides in El Salvador compared to previous years.

2022, the third full year of President Nayib Bukele in office, registered the lowest record in the number of homicides in El Salvador. This year, El Salvador’s homicide rate dropped to 7.8 homicides per 100,000 inhabitants.

This reduction is an immense achievement for the current administration if compared to what the country experienced in the previous 30 years.

Homicide Rate Under The Bukele Administration

President Nayib Bukele took office on June 1st, 2019, and one of the first items on his agenda was launching his security plan, the territorial control plan.

2020, the first full year of Nayib Bukele in office, set a low record in homicides; it reduced it to 20 murders per 100,000 inhabitants or 3.7 per day. This 2020 record got broken in 2021 and again in 2022.

President Bukele and his administration credit the homicide reduction to the implementation of the Territorial Control Plan. However, members of Bukele’s opposition and the US government alleged that this reduction is due to a secret truce between gangs and the Bukele administration.

On December 8th, 2021, the U.S. Department of the Treasury issued a press release announcing sanctions against two members of Bukele’s cabinet due to alleged negotiations with gangs.

President Nayib Bukele has criticized the U.S. accusations against members of his cabinet. The members of the Bukele cabinet accused have not made any public remarks regarding the U.S. allegations.

In other words, our actions against crime do not have the backing of the current US Government. That is why we did not receive recognition for the large drug seizures nor for the reduction in homicides (recognized even by the opposition media).
President Nayib Bukele. December 2021.

El Salvador’s Homicide Rate Since 1991

Since 1991, El Salvador has been one of the most violent countries in the world, not at war. El Salvador entered the list of the top 20 countries with a high homicide rate in 1994 (Homicide rate per 100,000 inhabitants.)

It quickly jumped to the first position and maintained that position until 2000.

In 2009, El Salvador again reached the first position and kept it until mid-2010, when Honduras jumped to number one. Then in 2015, it reached the first position again; this time, it maintained the rank until late 2019.

Finally, around mid to late 2021, El Salvador left the list of the top 20 countries with the highest homicide rate per 100,000 people.

Updated: 7-25-2023

Hedge Fund Bets There’s Value In El Salvador After 180% Bond Run

* Converium Is Sticking To Position It Began Building Last Year

* Fears Over Adoption Of Bitcoin Were ‘Overblown,’ Fund Says

A hedge fund that bought El Salvador bonds last year still sees value in the debt even after it posted a 180% return.

Converium Capital Inc. is sticking to a position it started building last year when most of Wall Street shunned the country due to fears over President Nayib Bukele’s obsession with Bitcoin.

Those concerns proved to be “overblown,” said Nadir Cura, an investment analyst at the Montreal-based fund. Bukele has shown himself to be more fiscally responsible than leaders of some other developing nations.

“El Salvador still offers attractive value when compared to other stressed EM sovereigns, many of which are struggling with substantially larger fiscal deficits and external funding gaps,” Cura said in an interview.

Founded by former Fir Tree partners Aaron Stern, Elliot Ruda and an ex-Clarke Inc. executive, Michael Rapps, Converium started trading in 2021.

The firm declined to disclose its position in El Salvador or how much it made off the investment. It managed about $345 million as of the end of February, according to the latest regulatory filings.

The bonds have posted an average return of 180% since last July, when accounting for price appreciation and coupon payments. That ranks them among the best performers in a broad emerging-market index compiled by Bloomberg.

Converium began to scoop up the notes in the second quarter and built its position through the summer, Cura said. The bonds traded at about 32 cents on the dollar at the end of June 2022, according to data compiled by Bloomberg.

The price recovered — most maturities trade above 65 cents — as the government repaid a bond in January, carried out two debt buybacks and hired a former International Monetary Fund official to advise in discussions with the lender.

The extra yield investors demand to hold Salvadoran sovereign debt over similar US Treasuries has more than halved in the last year. It hovers just above the 10 percentage-point threshold to be considered distressed. The country has few upcoming bond maturities.

Bukele scared off investors after he adopted Bitcoin as a legal tender alongside the US dollar and started using public coffers to buy the crypto currency.

However, he has spent less than $200 million on the digital coins, which Cura said is a small amount for a $34 billion economy.

Updated: 8-15-2023

Bitcoin-Touting Bukele’s Bond Rally Draws JPMorgan, Eaton Vance

* El Salvador Global Bonds Have Returned Over 70% This Year

* President Has Signaled Willingness To Pay Sovereign Debt

El Salvador President Nayib Bukele scared off many on Wall Street by embracing Bitcoin. Two years later, the bond rally he’s overseeing is proving too lucrative to resist.

Eye-popping 70% returns — the best among dollar bonds from emerging markets this year — are attracting investors who were once cautious or avoiding the securities altogether. JPMorgan Chase & Co, Eaton Vance and PGIM Fixed Income are among those who have recommended or bought the debt, betting it will continue climbing.

“Although we missed a significant share of the rally, we still think there’s value across El Salvador’s curve,” JPMorgan research strategists Ben Ramsey, Nishant Poojary and Gorka Lalaguna wrote in a July note, moving overweight on the debt. “There’s room for this credit to keep outperforming.”

The optimism demonstrates how Bukele has gained acceptance from both money managers and his peers in Latin America after many had dismissed him as an anti-establishment maverick.

His hard-line stance on gangs, which has dramatically cut crime in the country, is influencing politics throughout the region. And his commitment to paying bondholders is making him a favorite among emerging-market investors.

While concerns remain over alleged human right abuses and his obsession with Bitcoin — which he adopted as an official currency in 2021 — Bukele has assuaged the bond market’s worst fears by engineering two debt buybacks, hiring a former International Monetary Fund veteran as an adviser and repaying $800 million of bonds.

The extra yield investors demand to hold Salvadoran sovereign bonds over similar US Treasuries has more than halved in the past year. Notes maturing in 2035 and thereafter are trading below the 10 percentage-point threshold to be considered distressed.

The country’s bond performances compares to a 6.6% average return across an index of developing nations.

“The story continues to be positive on the fiscal accounts and Bukele has continued to be very consistent in signaling to bondholders that he’s serious about paying the debt,” said Zulfi Ali, a portfolio manager at PGIM.

Besides JPMorgan, Eaton Vance and PGIM, Lord Abbett & Co LLC, Neuberger Berman Group LLC and UBS Group AG have added the debt since April, according to data compiled by Bloomberg.

“El Salvador has benefited from proactive and prudent management of its balance sheet, including a debt buyback during the second half of 2022 and material pension reform,” said Mila Skulkina, a money manager at Lord Abbett.

For Shamaila Khan, head of emerging markets and Asia Pacific at UBS Asset Management Americas Inc., the market was overpricing the risk of future defaults.

“The policy mix was a lot more favorable and it implied that the default risks in the coming months and possibly years are not as high as what was priced into the market,” Khan said.

Still, for some investors, El Salvador remains a high-risk trade, especially starting in 2027 when the nation faces a large maturity wall. The government doesn’t have much freedom in its financing plan and may have difficulty navigating if the market turns more negative on risk assets, said Katrina Butt, a senior economist at AllianceBernstein in New York.

Notes maturing in 2027, 2029 and 2032 are still trading at distressed levels.

Due to the medium- and long-term risks, Claudia Calich, the head of emerging-market debt at M&G Investments, has stayed neutral on the credit.

Even if the country manages to pull through the next couple of years, it faces a series of issues including limited dollar reserves and questions over whether it can access global capital markets.

“Eventually we’d need to talk about not only a situation about liquidity but we’d also need to address good policy making,” Calich said. “Ultimately, the country will need to start relying on external markets again.”

Updated: 8-16-2023

Bitcoin-Friendly El Salvador Sees Bond Returns Soar To 70% In 2023

El Salvador paid $800 million in debt at the start of the year before the maturing period, raising the confidence of investors, as President Bukele says “told you so.”

El Salvador, which adopted Bitcoin as a legal tender in 2021, has seen its dollar bond outperform the majority of the emerging markets with a 70% return in 2023.

The massive rally of the bond has now drawn interest from several institutional giants, including JP Morgan, Eaton Vance and PGIM Fixed, prompting President Nayib Bukele to say, “I told you so.”

Apart from the institutional giants, the likes of Lord Abbett & Co LLC, Neuberger Berman Group LLC and UBS Group AG have also added debt security since April, reported Bloomberg.

Paolo Ardoino, chief technology officer of Bitfinex, told Cointelegraph that the performance of El Salvador bonds is a clear signal that investors are supportive of the financial policies of the El Salvador government and demonstrates the renewed interest in investing in the El Salvador story while adding:

“As the first company to receive a Digital Asset Licence, we are seeing significant interest in digital asset issuance and renewable energy investments, which the country has in abundance and is being used for Bitcoin mining and to provide more energy for the country’s electrical grid.”

The growing demand for El Salvador’s debt security in 2023 is quite a contrast to its performance a couple of years ago when it first adopted Bitcoin as a legal tender.

The BTC adoption created uncertainty among investors who bet against the country’s bonds, with several financial agencies casting a shadow of doubt on the country’s financial future.

In February 2022, the American credit rating agency Fitch lowered the country’s long-term Issuer Default Rating from B- to CCC, citing policy uncertainty and the Bitcoin adoption, along with an $800-million debt payment due for January 2023.

El Salvador paid $800 million in debt in full within the due maturing time at the start of this year, raising confidence in the country’s bonds again.

President Nayib Bukele at the time noted that they have proven every finance pundit wrong who doubted whether they would be able to pay their debts in time after Bitcoin adoption.

In the past year, almost every legacy international news outlet said that because of our “#Bitcoin bet”, El Salvador was going to default on its debt by January 2023 (since we had an 800 million dollar bond maturing today).

Literally, hundreds of articles https://t.co/rEiK7K13U4

— Nayib Bukele (@nayibbukele) January 24, 2023

This rise in the confidence of investors is visible from the bond’s performance throughout 2023. During the same time frame, El Salvador also passed a landmark crypto bill, paving the way for a Bitcoin-backed Volcano bond.

El Salvador and its president have been at the receiving end of criticism ever since they first adopted Bitcoin in September 2021 as legal tender along with the United States dollar.

Financial pundits predicted that the BTC adoption will further strain Salvador’s financial conditions.

However, within two years, the debt security of the state has become a hotcake among institutional giants, the same that once advised against its buying.

Updated: 8-30-2023

Google Cloud To Digitize El Salvador’s Governance, Healthcare And Education

Google Cloud and the government of El Salvador have entered into a seven-year partnership to digitize the country’s infrastructure in various sectors.

Google Cloud announced a new partnership with the government of El Salvador on Aug. 29 to establish an office and provide Google Distributed Cloud (GDC) services in the country.

The partnership aims to digitize the country, update government services and improve the healthcare and education systems. The GDC will also help bring infrastructure closer to where data is generated for El Salvador.

Nayib Bukele, the country’s president, said he believes El Salvador is quickly becoming a “hub for innovation.”

“El Salvador is moving forward. We believe technology and foreign investment are key for development.”

He also took to social media and posted about the partnership with a smirking smiley face emoji.

Google plans to establish operations in El Salvador

Official press release from @Google:https://t.co/Fm1i3YizNr

— Nayib Bukele (@nayibbukele) August 29, 2023

The partnership will span seven years, pending full legislative approval, and will help the government digitize projects and processes, such as invoicing, permitting and more.

According to the announcement, Google Cloud’s entrance into El Salvador marks the first Latin American government to utilize cloud technology.

Thomas Kurian, CEO of Google Cloud, said he believes cloud computing can “truly transform” Latin America.

“Access to cloud computing has dramatically expanded across industries and regions throughout the world,“ he said, adding, “Enabling both small companies and the public sector to utilize the very same applications and services as more mature markets.”

Cointelegraph has reached out to Google Cloud for additional comments on its recent expansion.

The additional GDC infrastructure will also help support El Salvador’s active stance on Bitcoin adoption and integration into society. It allows for Bitcoin full nodes with Ordinal Protocol support.

Additionally, on Aug. 8, El Salvador granted the cryptocurrency exchange Binance a license to offer crypto services to users in the country. Bitcoin has been legal tender there since 2021.

Recently, the Bitcoin Beach initiative took to the classroom and taught over 25,000 students about Bitcoin and helped them earn a “Bitcoin diploma” via the country’s education system.

The country has already seen immediate returns on the program with the example of one teenager who earned the diploma and then returned to his former school to teach educators about the digital asset.

Updated: 9-5-2023

El Salvador To Introduce Bitcoin Education In Schools By 2024

The nonprofit and NGO Mi Primer Bitcoin partnered with the Ministry of Education of El Salvador to include Bitcoin in its curriculum.

The Ministry of Education of El Salvador and the nonprofit, nongovernmental organization Mi Primer Bitcoin (MPB), meaning “My First Bitcoin,” partnered to add Bitcoin education to public school curriculum by 2024.

John Dennehy, the founder of MPB, confirmed to Cointelegraph that this is a project of the Ministry of Education that MPB is assisting with, along with Bitcoin Beach.

The Mi Primer Bitcoin program, from which students receive a diploma of completion, will be the primary source material for the Bitcoin portion, according to Dennehy.

✨ What an inspiring vision! The future of El Salvador shines bright with plans to introduce Bitcoin education in every public school by 2024.

Together, we’re making strides towards financial empowerment and knowledge for all. #BitcoinEducation #EmpoweringElSalvador https://t.co/oMkRqJFsTN

— Mi Primer Bitcoin (@MyfirstBitcoin_) September 4, 2023

He said training for the pilot program begins on Sept. 7 with assistance from Bitcoin Beach. The Bitcoin diploma program will be taught to 150 public school teachers from 75 schools to provide them with a “base knowledge” of Bitcoin.

“As the first nation to adopt Bitcoin, El Salvador will be an example for the world. Quality education is our best chance to ensure that that example is a positive one.”

Dennehy said that after the initial training, the teachers will return to their own schools and teach from the curriculum created by the Ministry of Education. “If successful,” he said, “the program will be rolled out to every school in the country next year.”

“When My First Bitcoin began two years ago, one of the dreams was to educate a nation. This is a significant step toward that.”

In a recent interview with Bitcoin Beach, its community leader Roman Martínez told Cointelegraph that over 25,000 students in El Salvador have already learned about Bitcoin in the classroom.

Dennehy said that while El Salvador is currently the focus, the mission is to bring Bitcoin education to the world.

“El Salvador is leading the way with public Bitcoin education, and we expect other nations to follow. The world is watching.”

He told Cointelegraph that MPB is already in early talks with two other governments in Latin America that are interested in implementing El Salvadorian-style Bitcoin education for local students.

Atención comunidad:

Les anunciamos el comienzo de la 1era edición en #Cuba del curso My First Bitcoin @MyfirstBitcoin_

‍Habrá plazas limitadas. Los interesados deben completar el formulario: https://t.co/EGusVs1dou

Los elegidos serán contactados posteriormente

— Cuba Bitcoin (@Cuba_BTC) September 3, 2023

On Sept. 4, Bitcoin Cuba posted on social media that sign-ups are open for the first edition of its own version of Mi Primer Bitcoin.

Updated: 10-4-2023

El Salvador Launches First Bitcoin Mining Pool As Volcano Energy Partners With Luxor

El Salvador’s ambitious renewable energy Bitcoin mining operation welcomes its first mining pool as Volcano Energy partners with Luxor.

El Salvador officially launched its first local Bitcoin mining pool as the Volcano Energy project begins mining blocks through Lava Pool in partnership with Luxor Technology.

The Bitcoin-friendly country’s $1 billion renewable energy project made headlines earlier in 2023, with stablecoin issuer Tether among companies investing in the project that plans to generate electricity from renewable sources in El Salvador to power future Bitcoin mining operations in the country.

Volcano Energy is tapping into Luxor’s experience in providing Bitcoin mining software and services. The project will also use Luxor’s Hashrate Forward Marketplace to mitigate market volatility through automated risk management strategies used by other major Bitcoin mining operators.

Bitcoin has the potential to pay off its climate debt much sooner than solar energy, and, thanks to its ability to mitigate methane, it can address more urgent challenges. #Bitcoin #ClimateAction

— Volcano Energy (@Volcano_Energy) October 3, 2023

A statement from Volcano Energy chief strategy officer Gerson Martinez highlighted ongoing efforts by El Salvador to secure first-mover advantage as a Bitcoin-adopting nationstate:

“Our vision is to create a vertically integrated energy and bitcoin mining company whose value is accretive to investors and to all Salvadoran citizens.”

Luxor’s chief operating officer Ethan Vera said the establishment of Volcano Energy and the start of local Bitcoin mining will contribute to Bitcoin’s ethos of geographical decentralization.

The announcement also mentions the potential for countries with abundant renewable energy sources to use Bitcoin mining to improve the economics of new energy projects.

Mining operations can provide a “flexible buyer of first and last resort” for energy producers and act as an alternative revenue stream.

As a public-private partnership, Volcano Energy is set to contribute 23% of its net income from mining operations to the El Salvador government.

Mining profits are also set to be reinvested into energy transmission and infrastructure to stimulate economic and technological growth in the Central American nation.

The first phase of the Volcano Energy project involves the construction of a 241-megawatt (MW) renewable energy park in Metapán that will comprise 169 MWs of photovoltaic solar energy and 72 MWs of wind power. The long-term goal of the project is to tap into abundant geothermal energy in the country.

In a previous exclusive interview with Cointelegraph at the Money20/20 conference in Amsterdam, Tether’s chief technology officer Paolo Ardoino said that the company’s investment was aimed at diversifying its interests into energy production while making use of renewable energy to mine Bitcoin.

The first phase of the Volcano Energy project involves the construction of a 241-megawatt (MW) renewable energy park in Metapán that will comprise 169 MWs of photovoltaic solar energy and 72 MWs of wind power.

The long-term goal of the project is to tap into abundant geothermal energy in the country.

In a previous exclusive interview with Cointelegraph at the Money20/20 conference in Amsterdam, Tether’s chief technology officer Paolo Ardoino said that the company’s investment was aimed at diversifying its interests into energy production while making use of renewable energy to mine Bitcoin.

Cointelegraph journalist Joe Hall traveled to El Salvador in 2023, documenting the adoption of Bitcoin as a means of payment in the two years since the country became the first in the world to officially make BTC legal tender.

Updated: 10-12-2023

“Why Go To War If You Have Bitcoin?. The Basic Story With Engaging In Wars, Is That It Provides A Cover Or Need To Distract From A Global Economic Melt-Down.” -Joker

Westerners See El Salvador As A Template For A New Monetary System

Forward-looking Western expats in El Salvador think they know what is coming in the world financial system and have taken action to protect their future purchasing power and freedoms.

History rhymes, and as global sovereign debt increases, a default in the West or a significant dollar devaluation become increasingly possible outcomes.

Throughout history, there is a pattern of fiat currency failing, usually by first hyper-inflating. The Zimbabwean Dollar and Weimar-era German Mark are prominent examples, but instances of debasement stretch as far back as the gradual reduction in silver content in the Roman Denarii.

The United States has the “exorbitant privilege” of being able to print the fiat currency that is the glue of the entire system, allowing her to solve domestic problems or to finance wars by creating new money.

This has allowed the U.S. to grow into perhaps the most powerful country in the history – militarily and economically – at the cost of an ever-accelerating national debt burden.

In my conversations, Bitcoin expats in El Salvador are well-versed in the historical pattern of the end of the long-term debt cycle resulting in a currency reset at a global scale.

While Bitcoin adoption has been slow since the Central American country made BTC legal tender, expats see the outlines of a whole new financial order, says Jonathan Martin.

Since I arrived in El Salvador In August, I have spent most of my time talking to Salvadorans about their experiences with Bitcoin, and how they see adoption progressing over time. But it is Western expats who see the most potential for Bitcoin to transform this Central American economy over the next decade.

They see the nation as similar to Singapore 40 years ago, with Bitcoin serving as the catalyst for future domestic economic growth.

I spoke with Fran Stajnar, an early Bitcoin adopter from New Zealand, about his ambitions to create new ways for retail investors to get exposure to the Salvadoran economy. Fran previously started a digital asset investment fund called “Techemy.Capital” and moved to the Salvadoran beach during the pandemic.

He currently is working on a Salvadoran ETF to democratize access to investing in the country and aims to channel Western capital into Salvadoran companies.

He views Bitcoin as the first instance of the separation of money and state, and posits this could lead to a change in mindsets very similar to the separation of church and state that led to the Renaissance.

Jonathan Martin is a graduate of Stanford University, Georgetown University, and a student at The Wharton School, currently on leave immersing himself in the world of Bitcoin in El Salvador.

El Salvador has become one of the primary destinations worldwide for passionate Bitcoiners, Stajnar says. Many view their home countries in the West as being overly restrictive and authoritarian, especially in response to COVID-19. El Salvador, to him, represents freedom, and the opportunity to live untethered from the politics of Western governments.

In this era of fiat debasement, Stajnar believes that El Salvador is a beacon of hope for other countries. Investors across the world are starting to consider the counter party risk involved with holding assets in Western countries that are potentially at risk of a future sovereign default.

Meanwhile, the BRICS nations are building an alternative system, pushing a global trend toward de-dollarization (though they insist that they are not junking the dollar just yet). Drip, drip, drip, flood.

Currently, the Salvadoran stock market, the Bolsa de Valores El Salvador, only has 83 listed companies. Unless you have the political access of a large sovereign wealth fund, it is currently difficult to find ways to deploy smaller amounts of capital.

Stajnar aims to create a way to allow for more people to invest in the domestic Salvadoran economy – which will increasingly become Bitcoin-backed — as a hedge against fiat-backed Western markets. He believes that GDP could increase precipitously by 2030, if President Bukele’s policies are maintained through his re-election in 2024.

With the advent of bitcoin, money is now digital and programmable. With time, there will be a Cambrian Explosion of projects that build upon the base layer Bitcoin network, Stajnar believes. It is the TCP/IP of the new internet of value, and we have only scratched the surface of its potential.

The Great Reset could happen a lot sooner than most people realize, as the fiat system has been experiencing inflation since 1971. Wages have not kept up with the costs of goods and services, and the result is a large wealth gap in the West.

El Salvador is in a unique position to serve as a proving ground for what the world on the “Bitcoin Standard” could look like – with a fairer monetary system for all.

Changing World Order

The implications of a nation state adopting the “Bitcoin Standard” stretch far beyond the border of El Salvador. Since the end of World War Two, the backbone of the global fiat monetary system has been U.S. Treasuries.

To function in the global economy, nations have been essentially required to maintain a reserve of Treasuries to purchase energy and participate in the U.S.-led global order.

If more countries adopt the “Bitcoin Standard” and begin settling trade between each other in Bitcoin rather than with fiat, we will create a global monetary system.

Bitcoin serves as a “Plan B,” where people can choose to opt out of the perpetually inflating fiat system.

Updated: 12-12-2023

El Salvador’s Bitcoin Volcano Bond Gets Regulatory Approval, Targets Q1 Launch

The Volcano Bond was approved by the country’s Digital Assets Commission on Dec. 11, with issuance expected in Q1 2024.

El Salvador’s long-anticipated Bitcoin bonds, also known as “Volcano Bonds,” have reportedly received the regulatory nod for a launch in early 2024.

The Volcano Bond was approved by El Salvador’s Digital Assets Commission and is anticipated to launch during the first quarter of 2024, according to a Dec. 11 statement from The National Bitcoin Office (ONBTC).

BREAKING NEWS

The Volcano Bond has just received regulatory approval from the Digital Assets Commission (CNAD).

We anticipate the bond will be issued during the first quarter of 2024.

This is just the beginning for new capital markets on #Bitcoin in El Salvador.

— The Bitcoin Office (@bitcoinofficesv) December 12, 2023

The country’s pro-Bitcoin leader Nayib Bukele also seemingly confirmed the news in a post of his own, captioned: “Wen volcano bond,” while also reposting several posts noting that the bonds will be issued in Q1 2024.

Wen volcano bond?

— Nayib Bukele (@nayibbukele) December 12, 2023

The possibility of the country issuing the Volcano Bonds initially came about in November 2021.

El Salvador first passed the landmark legislation providing the legal framework for the Bitcoin-backed bond on Jan. 11. The Volcano Bond is intended to pay down sovereign debt and fund the construction of the country’s proposed “Bitcoin City.”

The ONBTC said the bond will be issued on the Bitfinex Securities Platform, a trading site for blockchain-based equities and bonds registered in El Salvador.

It signals the beginning of Bitcoin-based capital markets in the country, with the bonds set to last 10 years and pay 6.5% in annual return to holders.

The Volcano Bond Has The Backing Of Paolo Ardoino, CTO of Bitfinex Securities:

“We support the government of El Salvador’s commitment to the development of Bitcoin-based capital markets and are excited to be part of their economic transformation. We look forward to the launch of new issuances in the first half of 2024.”

El Salvador recently launched a 241-megawatt Bitcoin mining project worth $1 billion, which will tap into the country’s volcanic resources through a partnership with Luxor Technology. Conchagua is the name of the volcano that will power the country’s mining operations.

We found the Volcano Bonds. Will be available soon!!! pic.twitter.com/cUxfhhoCRn

— Bitcoin Beach (@Bitcoinbeach) December 12, 2023

The approval comes nearly 21 months after the country’s former finance minister, Alejandro Zelaya, said the Volcano Bond would launch in mid-March 2022.

This move marks a new chapter in the country’s embrace of Bitcoin and its integration into the national economy.

The National Bitcoin Office of El Salvador, under the leadership of President Nayib Bukele, announced on social media that the Volcano Bond had been approved by the Digital Assets Commission.

The bond, which will be issued on the Bitfinex Securities Platform, is expected to be a cornerstone in the development of new capital markets based on Bitcoin in El Salvador.

El Salvador made headlines in January when it passed landmark legislation providing a legal framework for the Bitcoin-backed bond.

The primary purpose of the Volcano Bond is to reduce the country’s sovereign debt and finance the construction of the proposed “Bitcoin City.”

The city is envisioned to be a hub for cryptocurrency and blockchain technology, further cementing El Salvador’s position as a leader in the crypto space.

Bitcoin Mining Project and Economic Implications

The bond’s approval comes on the heels of El Salvador’s launch of a $1 billion Bitcoin mining project, which utilizes the country’s volcanic resources for energy.

This project not only showcases the country’s commitment to cryptocurrency but also highlights its innovative approach to leveraging natural resources for economic growth.

Updated: 3-14-2024

El Salvador Makes Bitcoin Holdings Publicly Viewable

El Salvador President Nayib Bukele’s Live Bitcoin Portfolio Tracker:

“There’s no way in hell would the US Federal Reserve allow it’s citizens to gain such transparency into the country’s financials even if it could figure out how much money was actually out there or how much gold was stored in Fort Knox”, Joker

The Central American nation moved $400 million in BTC into a cold storage wallet this week.

* El Salvador Moved More Than 5,000 BTC Into A Cold Wallet This Week.
* The disclosure by President Nayib Bukele nearly doubles the country’s known stash of the digital asset.

Bitcoin-forward Central American nation El Salvador this week moved $400 million worth of bitcoin (BTC) – “a big chunk” – into a cold wallet, according to its President, Nayib Bukele.

In a post on X (formerly Twitter), Bukele referred to the new setup as “our first #Bitcoin piggy bank.” El Salvador stored the cold wallet “in a physical vault within our national territory,” he said, including a photo of a wallet that held 5,689.68 BTC, worth $411 million at Thursday’s prices.

A bitcoin treasury of that size places El Salvador’s holdings far higher than previously believed. Even on Thursday, public trackers place the nation’s trove at less than 3,000 BTC ($205 million).

Earlier this week Buckle teased that the country was not simply buying BTC but also getting it by selling passports, through currency conversions for businesses, from mining and from government services.

The revelation represents the first time that Bukele has tied his nation’s holdings to a specific address. He previously relied solely on social media posts to make claims about the size of his trove, providing occasional updates whenever El Salvador bought more.

El Salvador became the first country to purchase bitcoin as a treasury asset in September 2021, when a single coin cost around $52,000. On Thursday BTC prices were north of $72,000, though in the past 24 hours the asset has traded above $73,000 and as low as $68,000.

We’ve decided to transfer a big chunk of our #Bitcoin to a cold wallet, and store that cold wallet in a physical vault within our national territory.

You can call it our first #Bitcoin piggy bank 🇸🇻

It’s not much, but it’s honest work 😂 pic.twitter.com/dqzedykxT1

— Nayib Bukele (@nayibbukele) March 14, 2024

The on-chain transfers into El Salvador’s cold wallet occurred over the past week, though the majority arrived Thursday. Most of the bitcoin held in that wallet came from Bitfinex, according to Arkham Intelligence.

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Petition Calling For Resignation Of U​.​S. Securities/Exchange Commission Chair Gary Gensler

100 Million Americans Can Legally Bet on the Super Bowl. A Spot Bitcoin ETF? Forget About it!

Green Finance Isn’t Going Where It’s Needed

Shedding Some Light On The Murky World Of ESG Metrics

SEC Targets Greenwashers To Bring Law And Order To ESG

BlackRock (Assets Under Management $7.4 Trillion) CEO: Bitcoin Has Caught Our Attention

BlackRock CEO Larry Fink ($10Trillion AUM) Has Unchecked Influence In Financial Markets And Needs To Be Reined In

Canada’s Major Banks Go Offline In Mysterious (Bank Run?) Hours-Long Outage (#GotBitcoin)

On-Chain Data: A Framework To Evaluate Bitcoin

On Its 14th Birthday, Bitcoin’s 1,690,706,971% Gain Looks Kind of… Well Insane

The Most Important Health Metric Is Now At Your Fingertips

American Bargain Hunters Flock To A New Online Platform Forged In China

Why We Should Welcome Another Crypto Winter

Traders Prefer Gold, Fiat Safe Havens Over Bitcoin As Russia Goes To War

Music Distributor DistroKid Raises Money At $1.3 Billion Valuation

Nas Selling Rights To Two Songs Via Crypto Music Startup Royal

Ultimate Resource On Music Catalog Deals

Ultimate Resource On Music And NFTs And The Implications For The Entertainment Industry

Lead And Cadmium Could Be In Your Dark Chocolate

Catawba, Native-American Tribe Approves First Digital Economic Zone In The United States

The Miracle Of Blockchain’s Triple Entry Accounting

How And Why To Stimulate Your Vagus Nerve!

Housing Boom Brings A Shortage Of Land To Build New Homes

Biden Lays Out His Blueprint For Fair Housing

No Grave Dancing For Sam Zell Now. He’s Paying Up For Hot Properties

Cracks In The Housing Market Are Starting To Show

Ever-Growing Needs Strain U.S. Food Bank Operations

Food Pantry Helps Columbia Students Struggling To Pay Bills

Food Insecurity Driven By Climate Change Has Central Americans Fleeing To The U.S.

Housing Insecurity Is Now A Concern In Addition To Food Insecurity

Families Face Massive Food Insecurity Levels

US Troops Going Hungry (Food Insecurity) Is A National Disgrace

Everything You Should Know About Community Fridges, From Volunteering To Starting Your Own

Fed Up Says Federal Leaders Robert Kaplan And Eric Rosengren Should Be Fired Over Insider Stock Trades

Pandora Papers Exposed Offshore Havens And Hidden Riches Of World Leaders And Billionaires Exposed In Unprecedented Leak (#GotBitcoin)

Russia’s Independent Journalists Including Those Who Revealed The Pandora Papers Need Your Help

10 Women Who Used Crypto To Make A Difference In 2021

Happy International Women’s Day! Leaders Share Their Experiences In Crypto

If Europe Can Tap Hi-Tech Industry’s Power-Hungry Data Centers To Heat Homes Then Why Not Use Bitcoin Miners As Well?

Dollar On Course For Worst Performance In Over A Decade (#GotBitcoin)

Juice The Stock Market And Destroy The Dollar!! (#GotBitcoin)

Unusual Side Hustles You May Not Have Thought Of

Ultimate Resource On Global Inflation And Rising Interest Rates (#GotBitcoin)

Essential Oils User’s Guide

How Doctors Treat Their Own Colds And Flus And How To Tell If Your Symptoms Are Flu, Covid, RSV or Strep

The Fed Is Setting The Stage For Hyper-Inflation Of The Dollar (#GotBitcoin)

An Antidote To Inflation? ‘Buy Nothing’ Groups Gain Popularity

Why Is Bitcoin Dropping If It’s An ‘Inflation Hedge’?

Lyn Alden Talks Bitcoin, Inflation And The Potential Coming Energy Shock

Ultimate Resource On How Black Families Can Fight Against Rising Inflation (#GotBitcoin)

What The Fed’s Rate Hike Means For Inflation, Housing, Crypto And Stocks

Egyptians Buy Bitcoin Despite Prohibitive New Banking Laws

Archaeologists Uncover Five Tombs In Egypt’s Saqqara Necropolis

History of Alchemy From Ancient Egypt To Modern Times

A Tale Of Two Egypts

Former World Bank Chief Didn’t Act On Warnings Of Sexual Harassment

Does Your Hospital or Doctor Have A Financial Relationship With Big Pharma?

Ultimate Resource Covering The Crisis Taking Place In The Nickel Market

Virginia-Based Defense Contractor Working For U.S. National-Security Agencies Use Google Apps To Secretly Steal Your Data

Apple Along With Meta And Secret Service Agents Fooled By Law Enforcement Impersonators

Handy Tech That Can Support Your Fitness Goals

How To Naturally Increase Your White Blood Cell Count

Ultimate Source For Russians Oligarchs And The Impact Of Sanctions On Them

Ultimate Source For Bitcoin Price Manipulation By Wall Street

Russia, Sri Lanka And Lebanon’s Defaults Could Be The First Of Many (#GotBitcoin)

Will Community Group Buying Work In The US?

Building And Running Businesses In The ‘Spirit Of Bitcoin’

Belgium Arrests EU Lawmaker, Four Others In Corruption Probe Linked To European Parliament (#GotBitcoin)

What Is The Mysterious Liver Disease Hurting (And Killing) Children?

Citigroup Trader Is Scapegoat For Flash Crash In European Stocks (#GotBitcoin)

Cryptocurrency Litigation Tracker Shows Details Of More Than 300 Active And Settled Court Cases Since 2013

Bird Flu Outbreak Approaches Worst Ever In U.S. With 37 Million Animals Dead

Financial Inequality Grouped By Race For Blacks, Whites And Hispanics

How Black Businesses Can Prosper From Targeting A Trillion-Dollar Black Culture Market (#GotBitcoin)

Bitcoin Buyers Flock To Investment Clubs Such As “Black Bitcoin Billionaires” To Learn Rules of The Road

Ultimate Resource For Central Bank Digital Currencies (#GotBitcoin) Page#2

Meet The Crypto Angel Investor Running For Congress In Nevada (#GotBitcoin?)

Introducing BTCPay Vault – Use Any Hardware Wallet With BTCPay And Its Full Node (#GotBitcoin?)

How Not To Lose Your Coins In 2020: Alternative Recovery Methods (#GotBitcoin?)

H.R.5635 – Virtual Currency Tax Fairness Act of 2020 ($200.00 Limit) 116th Congress (2019-2020)

Adam Back On Satoshi Emails, Privacy Concerns And Bitcoin’s Early Days

The Prospect of Using Bitcoin To Build A New International Monetary System Is Getting Real

How To Raise Funds For Australia Wildfire Relief Efforts (Using Bitcoin And/Or Fiat )

Former Regulator Known As ‘Crypto Dad’ To Launch Digital-Dollar Think Tank (#GotBitcoin?)

Currency ‘Cold War’ Takes Center Stage At Pre-Davos Crypto Confab (#GotBitcoin?)

A Blockchain-Secured Home Security Camera Won Innovation Awards At CES 2020 Las Vegas

Bitcoin’s Had A Sensational 11 Years (#GotBitcoin?)

Sergey Nazarov And The Creation Of A Decentralized Network Of Oracles

Google Suspends MetaMask From Its Play App Store, Citing “Deceptive Services”

Christmas Shopping: Where To Buy With Crypto This Festive Season

At 8,990,000% Gains, Bitcoin Dwarfs All Other Investments This Decade

Coinbase CEO Armstrong Wins Patent For Tech Allowing Users To Email Bitcoin

Bitcoin Has Got Society To Think About The Nature Of Money

How DeFi Goes Mainstream In 2020: Focus On Usability (#GotBitcoin?)

Dissidents And Activists Have A Lot To Gain From Bitcoin, If Only They Knew It (#GotBitcoin?)

At A Refugee Camp In Iraq, A 16-Year-Old Syrian Is Teaching Crypto Basics

Bitclub Scheme Busted In The US, Promising High Returns From Mining

Bitcoin Advertised On French National TV

Germany: New Proposed Law Would Legalize Banks Holding Bitcoin

How To Earn And Spend Bitcoin On Black Friday 2019

The Ultimate List of Bitcoin Developments And Accomplishments

Charities Put A Bitcoin Twist On Giving Tuesday

Family Offices Finally Accept The Benefits of Investing In Bitcoin

An Army Of Bitcoin Devs Is Battle-Testing Upgrades To Privacy And Scaling

Bitcoin ‘Carry Trade’ Can Net Annual Gains With Little Risk, Says PlanB

Max Keiser: Bitcoin’s ‘Self-Settlement’ Is A Revolution Against Dollar

Blockchain Can And Will Replace The IRS

China Seizes The Blockchain Opportunity. How Should The US Respond? (#GotBitcoin?)

Jack Dorsey: You Can Buy A Fraction Of Berkshire Stock Or ‘Stack Sats’

Bitcoin Price Skyrockets $500 In Minutes As Bakkt BTC Contracts Hit Highs

Bitcoin’s Irreversibility Challenges International Private Law: Legal Scholar

Bitcoin Has Already Reached 40% Of Average Fiat Currency Lifespan

Yes, Even Bitcoin HODLers Can Lose Money In The Long-Term: Here’s How (#GotBitcoin?)

Unicef To Accept Donations In Bitcoin (#GotBitcoin?)

Former Prosecutor Asked To “Shut Down Bitcoin” And Is Now Face Of Crypto VC Investing (#GotBitcoin?)

Switzerland’s ‘Crypto Valley’ Is Bringing Blockchain To Zurich

Next Bitcoin Halving May Not Lead To Bull Market, Says Bitmain CEO

Tim Draper Bets On Unstoppable Domain’s .Crypto Domain Registry To Replace Wallet Addresses (#GotBitcoin?)

Bitcoin Developer Amir Taaki, “We Can Crash National Economies” (#GotBitcoin?)

Veteran Crypto And Stocks Trader Shares 6 Ways To Invest And Get Rich

Is Chainlink Blazing A Trail Independent Of Bitcoin?

Nearly $10 Billion In BTC Is Held In Wallets Of 8 Crypto Exchanges (#GotBitcoin?)

SEC Enters Settlement Talks With Alleged Fraudulent Firm Veritaseum (#GotBitcoin?)

Blockstream’s Samson Mow: Bitcoin’s Block Size Already ‘Too Big’

Attorneys Seek Bank Of Ireland Execs’ Testimony Against OneCoin Scammer (#GotBitcoin?)

OpenLibra Plans To Launch Permissionless Fork Of Facebook’s Stablecoin (#GotBitcoin?)

Tiny $217 Options Trade On Bitcoin Blockchain Could Be Wall Street’s Death Knell (#GotBitcoin?)

Class Action Accuses Tether And Bitfinex Of Market Manipulation (#GotBitcoin?)

Sharia Goldbugs: How ISIS Created A Currency For World Domination (#GotBitcoin?)

Bitcoin Eyes Demand As Hong Kong Protestors Announce Bank Run (#GotBitcoin?)

How To Securely Transfer Crypto To Your Heirs

‘Gold-Backed’ Crypto Token Promoter Karatbars Investigated By Florida Regulators (#GotBitcoin?)

Crypto News From The Spanish-Speaking World (#GotBitcoin?)

Financial Services Giant Morningstar To Offer Ratings For Crypto Assets (#GotBitcoin?)

‘Gold-Backed’ Crypto Token Promoter Karatbars Investigated By Florida Regulators (#GotBitcoin?)

The Original Sins Of Cryptocurrencies (#GotBitcoin?)

Bitcoin Is The Fraud? JPMorgan Metals Desk Fixed Gold Prices For Years (#GotBitcoin?)

Israeli Startup That Allows Offline Crypto Transactions Secures $4M (#GotBitcoin?)

[PSA] Non-genuine Trezor One Devices Spotted (#GotBitcoin?)

Bitcoin Stronger Than Ever But No One Seems To Care: Google Trends (#GotBitcoin?)

First-Ever SEC-Qualified Token Offering In US Raises $23 Million (#GotBitcoin?)

You Can Now Prove A Whole Blockchain With One Math Problem – Really

Crypto Mining Supply Fails To Meet Market Demand In Q2: TokenInsight

$2 Billion Lost In Mt. Gox Bitcoin Hack Can Be Recovered, Lawyer Claims (#GotBitcoin?)

Fed Chair Says Agency Monitoring Crypto But Not Developing Its Own (#GotBitcoin?)

Wesley Snipes Is Launching A Tokenized $25 Million Movie Fund (#GotBitcoin?)

Mystery 94K BTC Transaction Becomes Richest Non-Exchange Address (#GotBitcoin?)

A Crypto Fix For A Broken International Monetary System (#GotBitcoin?)

Four Out Of Five Top Bitcoin QR Code Generators Are Scams: Report (#GotBitcoin?)

Waves Platform And The Abyss To Jointly Launch Blockchain-Based Games Marketplace (#GotBitcoin?)

Bitmain Ramps Up Power And Efficiency With New Bitcoin Mining Machine (#GotBitcoin?)

Ledger Live Now Supports Over 1,250 Ethereum-Based ERC-20 Tokens (#GotBitcoin?)

Miss Finland: Bitcoin’s Risk Keeps Most Women Away From Cryptocurrency (#GotBitcoin?)

Artist Akon Loves BTC And Says, “It’s Controlled By The People” (#GotBitcoin?)

Ledger Live Now Supports Over 1,250 Ethereum-Based ERC-20 Tokens (#GotBitcoin?)

Co-Founder Of LinkedIn Presents Crypto Rap Video: Hamilton Vs. Satoshi (#GotBitcoin?)

Crypto Insurance Market To Grow, Lloyd’s Of London And Aon To Lead (#GotBitcoin?)

No ‘AltSeason’ Until Bitcoin Breaks $20K, Says Hedge Fund Manager (#GotBitcoin?)

NSA Working To Develop Quantum-Resistant Cryptocurrency: Report (#GotBitcoin?)

Custody Provider Legacy Trust Launches Crypto Pension Plan (#GotBitcoin?)

Vaneck, SolidX To Offer Limited Bitcoin ETF For Institutions Via Exemption (#GotBitcoin?)

Russell Okung: From NFL Superstar To Bitcoin Educator In 2 Years (#GotBitcoin?)

Bitcoin Miners Made $14 Billion To Date Securing The Network (#GotBitcoin?)

Why Does Amazon Want To Hire Blockchain Experts For Its Ads Division?

Argentina’s Economy Is In A Technical Default (#GotBitcoin?)

Blockchain-Based Fractional Ownership Used To Sell High-End Art (#GotBitcoin?)

Portugal Tax Authority: Bitcoin Trading And Payments Are Tax-Free (#GotBitcoin?)

Bitcoin ‘Failed Safe Haven Test’ After 7% Drop, Peter Schiff Gloats (#GotBitcoin?)

Bitcoin Dev Reveals Multisig UI Teaser For Hardware Wallets, Full Nodes (#GotBitcoin?)

Bitcoin Price: $10K Holds For Now As 50% Of CME Futures Set To Expire (#GotBitcoin?)

Bitcoin Realized Market Cap Hits $100 Billion For The First Time (#GotBitcoin?)

Stablecoins Begin To Look Beyond The Dollar (#GotBitcoin?)

Bank Of England Governor: Libra-Like Currency Could Replace US Dollar (#GotBitcoin?)

Binance Reveals ‘Venus’ — Its Own Project To Rival Facebook’s Libra (#GotBitcoin?)

The Real Benefits Of Blockchain Are Here. They’re Being Ignored (#GotBitcoin?)

CommBank Develops Blockchain Market To Boost Biodiversity (#GotBitcoin?)

SEC Approves Blockchain Tech Startup Securitize To Record Stock Transfers (#GotBitcoin?)

SegWit Creator Introduces New Language For Bitcoin Smart Contracts (#GotBitcoin?)

You Can Now Earn Bitcoin Rewards For Postmates Purchases (#GotBitcoin?)

Bitcoin Price ‘Will Struggle’ In Big Financial Crisis, Says Investor (#GotBitcoin?)

Fidelity Charitable Received Over $100M In Crypto Donations Since 2015 (#GotBitcoin?)

Would Blockchain Better Protect User Data Than FaceApp? Experts Answer (#GotBitcoin?)

Just The Existence Of Bitcoin Impacts Monetary Policy (#GotBitcoin?)

What Are The Biggest Alleged Crypto Heists And How Much Was Stolen? (#GotBitcoin?)

IRS To Cryptocurrency Owners: Come Clean, Or Else!

Coinbase Accidentally Saves Unencrypted Passwords Of 3,420 Customers (#GotBitcoin?)

Bitcoin Is A ‘Chaos Hedge, Or Schmuck Insurance‘ (#GotBitcoin?)

Bakkt Announces September 23 Launch Of Futures And Custody

Coinbase CEO: Institutions Depositing $200-400M Into Crypto Per Week (#GotBitcoin?)

Researchers Find Monero Mining Malware That Hides From Task Manager (#GotBitcoin?)

Crypto Dusting Attack Affects Nearly 300,000 Addresses (#GotBitcoin?)

A Case For Bitcoin As Recession Hedge In A Diversified Investment Portfolio (#GotBitcoin?)

SEC Guidance Gives Ammo To Lawsuit Claiming XRP Is Unregistered Security (#GotBitcoin?)

15 Countries To Develop Crypto Transaction Tracking System: Report (#GotBitcoin?)

US Department Of Commerce Offering 6-Figure Salary To Crypto Expert (#GotBitcoin?)

Mastercard Is Building A Team To Develop Crypto, Wallet Projects (#GotBitcoin?)

Canadian Bitcoin Educator Scams The Scammer And Donates Proceeds (#GotBitcoin?)

Amazon Wants To Build A Blockchain For Ads, New Job Listing Shows (#GotBitcoin?)

Shield Bitcoin Wallets From Theft Via Time Delay (#GotBitcoin?)

Blockstream Launches Bitcoin Mining Farm With Fidelity As Early Customer (#GotBitcoin?)

Commerzbank Tests Blockchain Machine To Machine Payments With Daimler (#GotBitcoin?)

Bitcoin’s Historical Returns Look Very Attractive As Online Banks Lower Payouts On Savings Accounts (#GotBitcoin?)

Man Takes Bitcoin Miner Seller To Tribunal Over Electricity Bill And Wins (#GotBitcoin?)

Bitcoin’s Computing Power Sets Record As Over 100K New Miners Go Online (#GotBitcoin?)

Walmart Coin And Libra Perform Major Public Relations For Bitcoin (#GotBitcoin?)

Judge Says Buying Bitcoin Via Credit Card Not Necessarily A Cash Advance (#GotBitcoin?)

Poll: If You’re A Stockowner Or Crypto-Currency Holder. What Will You Do When The Recession Comes?

1 In 5 Crypto Holders Are Women, New Report Reveals (#GotBitcoin?)

Beating Bakkt, Ledgerx Is First To Launch ‘Physical’ Bitcoin Futures In Us (#GotBitcoin?)

Facebook Warns Investors That Libra Stablecoin May Never Launch (#GotBitcoin?)

Government Money Printing Is ‘Rocket Fuel’ For Bitcoin (#GotBitcoin?)

Bitcoin-Friendly Square Cash App Stock Price Up 56% In 2019 (#GotBitcoin?)

Safeway Shoppers Can Now Get Bitcoin Back As Change At 894 US Stores (#GotBitcoin?)

TD Ameritrade CEO: There’s ‘Heightened Interest Again’ With Bitcoin (#GotBitcoin?)

Venezuela Sets New Bitcoin Volume Record Thanks To 10,000,000% Inflation (#GotBitcoin?)

Newegg Adds Bitcoin Payment Option To 73 More Countries (#GotBitcoin?)

China’s Schizophrenic Relationship With Bitcoin (#GotBitcoin?)

More Companies Build Products Around Crypto Hardware Wallets (#GotBitcoin?)

Bakkt Is Scheduled To Start Testing Its Bitcoin Futures Contracts Today (#GotBitcoin?)

Bitcoin Network Now 8 Times More Powerful Than It Was At $20K Price (#GotBitcoin?)

Crypto Exchange BitMEX Under Investigation By CFTC: Bloomberg (#GotBitcoin?)

“Bitcoin An ‘Unstoppable Force,” Says US Congressman At Crypto Hearing (#GotBitcoin?)

Bitcoin Network Is Moving $3 Billion Daily, Up 210% Since April (#GotBitcoin?)

Cryptocurrency Startups Get Partial Green Light From Washington

Fundstrat’s Tom Lee: Bitcoin Pullback Is Healthy, Fewer Searches Аre Good (#GotBitcoin?)

Bitcoin Lightning Nodes Are Snatching Funds From Bad Actors (#GotBitcoin?)

The Provident Bank Now Offers Deposit Services For Crypto-Related Entities (#GotBitcoin?)

Bitcoin Could Help Stop News Censorship From Space (#GotBitcoin?)

US Sanctions On Iran Crypto Mining — Inevitable Or Impossible? (#GotBitcoin?)

US Lawmaker Reintroduces ‘Safe Harbor’ Crypto Tax Bill In Congress (#GotBitcoin?)

EU Central Bank Won’t Add Bitcoin To Reserves — Says It’s Not A Currency (#GotBitcoin?)

The Miami Dolphins Now Accept Bitcoin And Litecoin Crypt-Currency Payments (#GotBitcoin?)

Trump Bashes Bitcoin And Alt-Right Is Mad As Hell (#GotBitcoin?)

Goldman Sachs Ramps Up Development Of New Secret Crypto Project (#GotBitcoin?)

Blockchain And AI Bond, Explained (#GotBitcoin?)

Grayscale Bitcoin Trust Outperformed Indexes In First Half Of 2019 (#GotBitcoin?)

XRP Is The Worst Performing Major Crypto Of 2019 (GotBitcoin?)

Bitcoin Back Near $12K As BTC Shorters Lose $44 Million In One Morning (#GotBitcoin?)

As Deutsche Bank Axes 18K Jobs, Bitcoin Offers A ‘Plan ฿”: VanEck Exec (#GotBitcoin?)

Argentina Drives Global LocalBitcoins Volume To Highest Since November (#GotBitcoin?)

‘I Would Buy’ Bitcoin If Growth Continues — Investment Legend Mobius (#GotBitcoin?)

Lawmakers Push For New Bitcoin Rules (#GotBitcoin?)

Facebook’s Libra Is Bad For African Americans (#GotBitcoin?)

Crypto Firm Charity Announces Alliance To Support Feminine Health (#GotBitcoin?)

Canadian Startup Wants To Upgrade Millions Of ATMs To Sell Bitcoin (#GotBitcoin?)

Trump Says US ‘Should Match’ China’s Money Printing Game (#GotBitcoin?)

Casa Launches Lightning Node Mobile App For Bitcoin Newbies (#GotBitcoin?)

Bitcoin Rally Fuels Market In Crypto Derivatives (#GotBitcoin?)

World’s First Zero-Fiat ‘Bitcoin Bond’ Now Available On Bloomberg Terminal (#GotBitcoin?)

Buying Bitcoin Has Been Profitable 98.2% Of The Days Since Creation (#GotBitcoin?)

Another Crypto Exchange Receives License For Crypto Futures

From ‘Ponzi’ To ‘We’re Working On It’ — BIS Chief Reverses Stance On Crypto (#GotBitcoin?)

These Are The Cities Googling ‘Bitcoin’ As Interest Hits 17-Month High (#GotBitcoin?)

Venezuelan Explains How Bitcoin Saves His Family (#GotBitcoin?)

Quantum Computing Vs. Blockchain: Impact On Cryptography

This Fund Is Riding Bitcoin To Top (#GotBitcoin?)

Bitcoin’s Surge Leaves Smaller Digital Currencies In The Dust (#GotBitcoin?)

Bitcoin Exchange Hits $1 Trillion In Trading Volume (#GotBitcoin?)

Bitcoin Breaks $200 Billion Market Cap For The First Time In 17 Months (#GotBitcoin?)

You Can Now Make State Tax Payments In Bitcoin (#GotBitcoin?)

Religious Organizations Make Ideal Places To Mine Bitcoin (#GotBitcoin?)

Goldman Sacs And JP Morgan Chase Finally Concede To Crypto-Currencies (#GotBitcoin?)

Bitcoin Heading For Fifth Month Of Gains Despite Price Correction (#GotBitcoin?)

Breez Reveals Lightning-Powered Bitcoin Payments App For IPhone (#GotBitcoin?)

Big Four Auditing Firm PwC Releases Cryptocurrency Auditing Software (#GotBitcoin?)

Amazon-Owned Twitch Quietly Brings Back Bitcoin Payments (#GotBitcoin?)

JPMorgan Will Pilot ‘JPM Coin’ Stablecoin By End Of 2019: Report (#GotBitcoin?)

Is There A Big Short In Bitcoin? (#GotBitcoin?)

Coinbase Hit With Outage As Bitcoin Price Drops $1.8K In 15 Minutes

Samourai Wallet Releases Privacy-Enhancing CoinJoin Feature (#GotBitcoin?)

There Are Now More Than 5,000 Bitcoin ATMs Around The World (#GotBitcoin?)

You Can Now Get Bitcoin Rewards When Booking At Hotels.Com (#GotBitcoin?)

North America’s Largest Solar Bitcoin Mining Farm Coming To California (#GotBitcoin?)

Bitcoin On Track For Best Second Quarter Price Gain On Record (#GotBitcoin?)

Bitcoin Hash Rate Climbs To New Record High Boosting Network Security (#GotBitcoin?)

Bitcoin Exceeds 1Million Active Addresses While Coinbase Custodies $1.3B In Assets

Why Bitcoin’s Price Suddenly Surged Back $5K (#GotBitcoin?)

Zebpay Becomes First Exchange To Add Lightning Payments For All Users (#GotBitcoin?)

Coinbase’s New Customer Incentive: Interest Payments, With A Crypto Twist (#GotBitcoin?)

The Best Bitcoin Debit (Cashback) Cards Of 2019 (#GotBitcoin?)

Real Estate Brokerages Now Accepting Bitcoin (#GotBitcoin?)

Ernst & Young Introduces Tax Tool For Reporting Cryptocurrencies (#GotBitcoin?)

Recession Is Looming, or Not. Here’s How To Know (#GotBitcoin?)

How Will Bitcoin Behave During A Recession? (#GotBitcoin?)

Many U.S. Financial Officers Think a Recession Will Hit Next Year (#GotBitcoin?)

Definite Signs of An Imminent Recession (#GotBitcoin?)

What A Recession Could Mean for Women’s Unemployment (#GotBitcoin?)

Investors Run Out of Options As Bitcoin, Stocks, Bonds, Oil Cave To Recession Fears (#GotBitcoin?)

Goldman Is Looking To Reduce “Marcus” Lending Goal On Credit (Recession) Caution (#GotBitcoin?)

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